WP/31/1994 of M/S S.V.GRANITES Vs PRL.SECY.IND AND COMMERCE HYDERABAD on 17 June 1994

1. ILR 1972 A.P. 719 = 1970 APHN 357

2. (2000) 6 SCC 359

3. AIR 1975 S.C. 1185

4. AIR 1970 S.C. 1 = (1969) 2 SCC 74

5. AIR 1958 S.C. 868 = 1958(34) ITR 150

6. AIR 1967 S.C. 681 = 1967(19) STC 144

7. AIR 1974 S.C. 1380 = 1974(2) SCC 453

8. AIR 1990 S.C. 10 = 1989(4) SCC 582

9. 2003(12) ILD 342

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD

(Special Original Jurisdiction)

TUESDAY, THE TWENTY NINETH DAY OF JUNETWO THOUSAND AND FOURTWO THOUSAND AND FOUR

PRESENT

THE HON'BLE MR JUSTICE BILAL NAZKI

and

THE HON'BLE MR JUSTICE P.S.NARAYANA

WRIT PETITION NO : 31 of 2004

Between:

M/s.National Mineral Development corp.Ltd.,Hyd. rep.by its Deputy Manager(Commercial) Sri Praveen Kumar 1 Commercial Tax officer, Agapura Circle,Hyderabad.

2 Deputy Commissioner (CT), Abids Division, Hyderabad.

3 Joint Commissioner (CT)(Legal) Andhra Pradesh, Hyderabad.

.....RESPONDENTS

Petition under Article 226 of the constitution of India praying that in thecircumstances stated in the Affidavit filed herein the High Court will be pleased toissue a writ or order or direction particularly one in the nature of writ of certiorari aftercalling for the records and quash the assessment order passed by the firstrespondent in GIR No.10396/92-93 (CST) dated 18-10-2002 and order refund of theamount of Rs.88,166/- paid by the petitioner for the above assessment year.

Counsel for the Petitioner:MR.S.KRISHNA MURTHY

Counsel for the Respondents : GP FOR COMMERCIAL TAXES

The Court made the following :

Heard Sri S.Krishna Murthy, the learned Counsel representing the writ petitioner andthe learned Government Pleader for Commercial Taxes.

M/s.National Mineral Development Corporation Limited, Hyderabad filed thepresent Writ Petition praying for a writ of certiorari after calling for the recordsand quash the assessment order passed by 1[st] respondent, Commercial TaxOfficer, Agapura Circle, Hyderabad in G.I.R.No.10396/92-93 (ST) dated 18-10-2002 and order refund of the amount of Rs.88,166/- paid by the writ petitionerfor the above assessment order and for such other suitable orders. The writpetitioner is a Public Limited Company engaged in the business of excavationand export of minerals and is an assessee on the rolls of the 1[st] respondent.The 1[st] respondent by his proceedings dated 20-10-1999 in Rc.No.1396/99-2000 had made an assessment under the Central Sales Tax Act, hereinafterreferred to as “Act” for the purpose of convenience for the Assessment Year1992-93 on a gross turn-over of Rs.12,06,07,766/- and Rs.11,98,49,711/-respectively and raised a demand of Rs.1,18,53,634/- and the same wasquestioned by way of W.P.No.22434/99 and the said Writ Petition was allowedo n 27-12-1999. The 1[st] respondent by his proceedings dated 18-10-2002 inG.I.R.No.10396/92-93 (CST) made a fresh assessment on gross and netturnovers of Rs.29,78,766/- and Rs.22,20,711/- to a tax of Rs.90,734/-. The standtaken by the writ petitioner is that this being the subject matter ofW.P.No.22434/99, the impugned order cannot be sustained and the same isliable to be quashed.

Conclusion

The 1[st] respondent filed a counter affidavit in detail and the stand taken by the1[st] respondent is that the writ petitioner claimed the relief only on the part ofthe turnover of Rs.11,76,29,000/- which was added on reassessment and noton turnover made in the original assessment. Further, specific stand wastaken that this Court in W.P.No.22434/99 did not set aside the turnover onassessment dated 6-9-1995.A reply affidavit was filed again reiterating the same stand taken in the affidavitfiled in support of the writ petition.

Sri S.Krishna Murthy, the learned Counsel representing the writ petitionerwould contend that there was neither a show cause notice nor a valid demandmade by the 1[st] respondent and the 1[st] respondent being a quasi-judicialauthority while making an assessment order is bound to follow the procedureand the impugned order is in violation of the principles of natural justice. TheCounsel also would submit that the assessment of 1995 got itself merged withthe subsequent assessment which was the subject matter of W.P.No.22434/99and in view of the same, the remedy available to the 1[st] respondent would beto get the prior order reviewed and definitely not by making the presentimpugned order which may even amount to contempt of Court. The Counselalso would submit that in view of the facts and circumstances the priorassessment also would be nonest in the eye of law and even on the ground ofnon-application of mind the said order also cannot be sustained and hencethe present impugned order is liable to be quashed.

Per contra the learned Government Pleader for Commercial Taxes had takenthis Court through several averments made in detail in the counter affidavitfiled by the 1[st] respondent and also the averments made in the affidavit filed insupport of the prior Writ Petition. The learned Counsel would contend that it isno doubt true that W.P.No.22434/99 was allowed, but on that simple groundalone it cannot be said that the present impugned order is contrary to the priororder made by this Court in W.P.No.22434/99 inasmuch as the originalassessment order was not set aside and in view of the same the present orderquestioned in the Writ Petition cannot be found fault in any way since there isno illegality or any other legal infirmity in making the impugned order. Evenotherwise, the learned Counsel would contend that no prejudice is caused tothe Writ Petitioner and there is some delay in approaching this Court byinvoking the jurisdiction of this Court under Article 226 of the Constitution ofIndia.

The simple question which had been argued at length by both the Counsel iswhether the present impugned order is contrary to or in conflict with the priororder made by this Court in W.P.No.22434/99 and whether the same is liable tobe quashed on the said ground. No doubt certain incidental and ancillaryquestions had been canvassed by both the Counsel in support of theirrespective contentions to substantiate their respective stands in relation to theprinciple question referred to supra. It may be appropriate to have a look at therelief prayed for in W.P.No.22434/99 which is as hereunder :

“For the reasons stated in the accompanying affidavit, the petitioner herein prays that this Hon’ble Court may be pleasedto issue a writ or order or direction particularly one in the natureof writ of certiorari after calling for the records and quash theimpugned order dated 20-10-1999 passed in R.C.No.1396/99-2000 in G.I.R.No.10396/92-93/CST by the first respondent orto pass such further or other orders as this Hon’ble Court maydeem fit and proper in the circumstances of the case.”

In the counter affidavit filed by the 1[st] respondent, at para-2, while narrating the details it was specifically pleaded as hereunder :

“ ……I respectfully submit that the petitioner-assessee for the year 1992-93filed returns under the CST Act, disclosing a gross turnover ofRs.29,78,766/- and net turnover of Rs.22,20,711/-. The returns filed by theassessee were accepted by my predecessor in office then, and heaccordingly passed assessment orders on 6-9-1995. The said order wasserved on the petitioner-assessee on 4-11-1995. Against this order, thepetitioner did not file appeal and thereby allowed the assessment to becomefinal. Similarly, the assessment of the petitioner for the year 1992-93 underthe APGST Act was also completed by my predecessor on 6-9-95.

While so, the Deputy Commissioner (CT) Abids, being the revisionalauthority under Section 20(2) of the APGST Act 1957 had revised theassessment orders of the petitioner on 26-2-96 for the year 1992-93under the APGST Act, adding a turnover of Rs.11,76,29,000/- towardssales of Exim Scripts/REP.Licences which escaped assessment at thehands of assessing authority. Against the revision orders for the year1992-93, the petitioner-dealer filed appeal before the Hon’ble Sales TaxAppellate Tribunal in T.A.No.413/96. The Hon’ble Sales Tax AppellateTribunal remanded the matter on 6-4-99 to the assessing authorityholding only a part of the above turnover i.e., Rs.8,87,59,000/- would beexigible to tax under the APGST Act and on the balance turnoverRs.2,88,70,000/-, the appeal was remanded as sales relating to outsidethe State sale was involved and for verification by the assessingauthority whether it is taxable at the hands of petitioner-assessee.

It is submitted that my predecessor in office, however, passedreassessment orders for the assessment year 1992-93 under the CSTAct on 20-10-1999 adding the turnover of entire sales of Exim Scripts ofRs.11,76,29,000/- to the turnover already reported by the petitioner-assessee through returns under the CST Act and accepted in theassessment order dt.6-9-95.

Against the assessment orders dt.20-10-99, the petitioner filed W.P.No.22434 of 1999 before this Hon’ble Court. In the affidavit filed insupport of that Writ Petition, the petitioner claimed relief only on thatpart of the turnover of Rs.11,76,29,000/- which was added on re-assessment and the tax due thereon but not on the turnover made inthe original assessment dt.6-9-95 relating to the sales of Ferric Oxide.This Hon’ble Court by an order dt.27-4-99 did not appreciate the actionof my predecessor in passing the assessment order on 20-10-1999adding the turnover of Rs.11,76,29,000/- relating to sales of EximScripts under the CST Act. Accordingly, by its order dt.27-1-99 allowedthe Writ Petition and quashed the impugned assessment proceedingsdt.20-10-1999 so far as the addition of turnover is concerned.

It is submitted that as the turnover relating to the sales of Ferric Oxidein the original assessment order dt.6-9-95 was also included in theimpugned assessment order dt.20-10-99, a separate order was passedon 18-10-02 confirming the turnovers reported by the petitioner andaccepted by the assessing authority in his assessment order dt.6-9-95.

By virtue of the orders of this Hon’ble High Court dt.27-12-99, thepetitioner was given relief, deleting the turnover of Exim Scripts addedin the re-assessment orders on 20-10-99, while restoring the turnoverrelating to the original assessment dt.6-9-95. By virtue of theassessment orders dt.18-10-02, no additional demand was raisedagainst the petitioner causing prejudice to him.”

From a careful reading of the order in W.P.No.22434/99 and the very pleadingof the writ petitioner it is clear that the original assessment of the year 1995was not set aside, but however, the stand taken by the writ petitioner is that theprior order had merged with the subsequent assessment order which was thesubject matter of W.P.No.22434/99 and hence when once the said assessmentwas quashed, the 1[st] respondent has no authority or jurisdiction to make theimpugned proceedings. No doubt incidentally contentions regarding the non-issuance of show cause notice of demand etc., also had been canvassed. Atthis juncture it may be appropriate to have a look at the relevant portion of theorder of this Court made in W.P.No.22434/99 dated 27-12-1999 wherein the Division Bench of this Court had stated :

“….. A survey of the facts narrated above could reveal that thefirst respondent has completely forsaken his duty as a quasi-judicial authority, blatantly misconstrued the order of theTribunal in T.A.No.413 of 1996 and clutched at the jurisdictionnot vested in it to revise the assessment under CST Act on thebasis of a non-existent directive of the Tribunal. The firstrespondent out-stepped his jurisdiction in projecting the verysame turnover that was assessed under APGST Act into theCST assessment by reviewing the CST assessment order.The question of revision of assessment would only arise if anyturnover had escaped assessment or had been subjected tolower rate of tax. The Tribunal’s order in an appeal arising outof the APGST assessment does not even contain a whisper orhint that any part of the turnover would attract tax under CSTAct. By figment of imagination, the first respondent proceededto revise the assessment under CST Act and the order of theTribunal is used as a cloak to raise a fanciful demand forRs.1.17 crores. It would be travesty of justice if the impugnedassessment is allowed to stand. It is one of the extraordinarycases where we are called upon to exercise the jurisdictionunder Article 226 of the Constitution to prevent furtherharassment to the assessee. It is not at all just and appropriateto relegate the petitioner to the remedy of appeal. In the result,the writ petition is allowed and the impugned order of theassessment is quashed…..”.

While dealing with the meaning of the expression ‘assessment’ under Section 14 of the A.P. General Sales Tax Act, 1957, a Division Bench of this Court in K.MAHMOOD OSMAN SAHEB & CO. Vs. STATE OF A.P. held :

“No doubt the word ‘assessment’ may have a comprehensivemeaning and may some times mean the whole procedure laiddown for imposing the tax or penalty. But the said expressionmust be interpreted with reference to the context in which it isused. Therefore, the expression assessment occurring in thelast sentence of Section 14(1) of the A.P.General Sales TaxAct 1957 is only referable to the final order of assessment andnot the whole proceedings for imposing the tax.”

From an analysis of the factual position it is clear that the writ petitioner is inknow of all the facts and also is conscious of the fact that the originalassessment had been left untouched by the subsequent judicial verdict.However, having kept quiet for a considerable length of time, the writ petitionerno doubt had invoked the jurisdiction of this Court under Article 226 of theConstitution of India questioning the impugned order. The principle ground ofattack of the applicability of the concept of doctrine of merger had not beenspecifically pleaded by the writ petitioner though in paras 5 and 6 of theaffidavit the prior order of the Division Bench of this Court in W.P.No.22434/99dated 27-12-1999 had been referred to and a specific stand had been takenthat the impugned assessment is contrary to the said order. InKUBHAYAMMED Vs. STATE OF KERALA the Apex Court while dealing with thedoctrine of merger had observed at paras 7 and 42 as hereunder:

“The doctrine of merger is neither a doctrine of Constitutional law nor adoctrine statutorily recognized. It is a common law doctrine founded onprinciples of propriety in the hierarchy of justice delivery system. Onmore occasions than one this Court had an opportunity of dealing withthe doctrine of merger. It would be advisable to trace and set out thejudicial opinion of this Court as it has progressed through the times.

……

……

“To merge” means to sink or disappear in something else; to becomeabsorbed or extinguished; to be combined or be swallowed up. Mergerin law is defined as the absorption of a thing of lesser importance by agreater, whereby the lesser ceases to exist, but the greater is notincreased; an absorption or swallowing up so as to involve a loss ofidentity and individuality. (See Corpus Juris Secundum, Vol.LVII,pp.1067-68).”

Except raising a vague ground of merger at the time of arguments without anyfactual foundation, the learned Counsel for the writ petitioner also was unableto substantiate how the several conditions or ingredients for applying thedoctrine of merger are satisfied in the present case. The Apex Court had welldiscussed the pre-conditions for attracting the applicability of doctrine ofmerger in SUSHIL KUMAR SEN Vs. STATE OF BIHAR a n d SHANKARRAMCHANDRA ABHYANKAR Vs. KRISHNAJI DATTATREYA BAPAT . Thisquestion of applicability or otherwise of the doctrine of merger had been welldiscussed in a catena of decisions by the Apex Court: COMMISSIONER OFINCOME TAX, BOMBAY Vs. AMRITLAL BHOGILAL AND CO. , STATE OFMADRAS Vs. MADURAI MILLS CO.LIMITED , GOJER BROS (PVT) LIMITED Vs.RATAN LAL SINGH and S.S.RATHORE Vs. STATE OF MADHYA PRADESH . ADivision Bench of this Court also had an occasion to deal with this aspect inSPECIAL DEPUTY COLLECTOR Vs. VASUDEVA RAO . In the light of thespecific stand taken in the counter affidavit by the 1[st] respondent and on acareful analysis of the impugned order and also the order made by this Courtin W.P.No.22434/99 this Court is satisfied that the applicability of doctrine ofmerger cannot be stretched too far to an assessment of this nature especiallyin the light of the fact that the original assessment was left untouched by theprior judicial verdict and an interpretation that in the light of the above factualposition the present order would be contrary to the prior order made by thisCourt would lead to absurdity. Apart from this aspect of the matter, this Court is thoroughly satisfied that absolutely no prejudice is caused to the writ petitioner by the present impugned order. Hence, for the reasons referred toabove, this Court sees no valid reasons to interfere with the impugned orderand accordingly the Writ Petition is dismissed as devoid of merits. No costs.

Bilal Nazki.,J

P.S.Narayana.,J

_________________

_________________

Date : 29-6-2004

L.R. copy to be marked : YES / NO

AM

..... REGISTRAR

// TRUE COPY //

SECTION OFFICER

To

1 Commercial Tax officer, Agapura Circle,Hyderabad.

2 Deputy Commissioner (CT), Abids Division, Hyderabad.

3 Joint Commissioner (CT)(Legal) Andhra Pradesh, Hyderabad.

4.2CCs to G.P. for Commercial Taxes, High Court Buildings, Hyderabad (OUT)

5.2CD copies