TMI Blog2014 (9) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 2007 is barred by limitation cannot be accepted. The returns for the months of April, 2006 to March, 2007 or the returns relate to the turnover of the financial year 2006-07, and therefore, the assessment order passed on March 30, 2007, is well within the limitation. It is not barred by limitation. The feeble submission that the impugned assessment order was antedated has not been substantiated and therefore, we reject the same. We accordingly hold that the impugned assessment order dated March 30, 2011 is not barred by limitation as per rule 14A(8) of the State Rules. Section 7 of the VAT Act exempts goods listed in the First Schedule from VAT. As per entry 45 it is cotton fabrics which are exempted and not towels. Towels fall under entry 52 of the Fourth Schedule. Therefore whenever a dealer seeks exemption for cotton fabrics as falling under entry 45 of the Fourth Schedule it is for the assessment officer to enquire into the same. In this case, it is neither disputed nor denied by the petitioner that the CTO, Autonagar Circle, Vijayawada, inspected the petitioner's machinery and found that they were producing terry towels. Secondly in their objections filed after receiving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revise the order of the DCTO, dated February 27, 2009. He proposed to levy tax on the sales turnover of cotton terry towelling fabrics on the premise that the petitioner claimed exemption on the sales turnover on the terry towels in the guise of terry towelling fabrics. The petitioner submitted objections to the show-cause notice on June 23, 2010. While the matter is pending, at that stage, the first respondent issued show-cause notice dated November 23, 2009 under the CST Act for the year 2006-07; the petitioner filed objections on December 16, 2009 and thereafter the first respondent passed the assessment order dated March 30, 2011 demanding ₹ 1,97,065 towards CST duly giving credit to the tax paid. Assailing the same, the dealer has filed the instant writ petition. It is contended by the dealer that the impugned order dated March 30, 2011, was served on the petitioner on June 29, 2011 and that the same is antedated. The impugned order is beyond the period of limitation prescribed under section 21(3) of the VAT Act and it was passed only to deny the refund claim made by the petitioner. It is further contended that the first respondent did not establish the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, zari and embroidery articles were omitted with effect from May 1, 2009 and no tax was levied from that day. The first respondent would further submit that after audit, the DCTO finalized the assessment on September 20, 2006; the petitioner paid the tax and penalty determined by the authority and therefore he cannot raise any objection if assessment under the CST Act for 2005-06 is undertaken by the first respondent. The petitioner accepted the assessment under the VAT Act and therefore he cannot question the assessment under the CST Act. As per rule 14A(8)(b) of the Central Sales Tax (Andhra Pradesh) Rules, 1957 (the State Rules), the assessment can be made within a period of four years from the expiry of the year to which the turnover relates, if the whole or any part of the turnover has escaped or under-assessed in any year. Therefore the plea that the assessment is barred by limitation cannot be accepted. The counsel for the petitioner and the special counsel for the Commercial Taxes have reiterated the submissions from their pleadings which are surmised supra. The background facts and submissions would give rise to two issues for consideration, namely, whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted as his assessment. But under section 21, if the assessing authority is not satisfied, he shall assess the VAT within four years of due date of return or within four years of the date of filing of the return whichever is later. As rule 23 read with section 2(36) requires a VAT dealer to file return within 20 days after the end of the tax period, the assessing authority can undertake assessment within four years from the date of filing of the return or otherwise assessment would be barred subject however to section 21(7) with which we are not concerned in this case. In exercise of the powers conferred under sub-sections (3), (4) and (5) of section 13 of the CST Act, the Governor of the State promulgated the Central Sales Tax (Andhra Pradesh) Rules, 1957 ( the State Rules ). Rule 14A(1)(a), (5A) and (8) to (11) thereof are relevant and read as under: 14A(1)(a): Every dealer registered under section 7 of the Act and every dealer liable to pay tax under the Act shall submit so as to reach the assessing authority on or before the 20th of every month a return in form CST VI showing the total and net turnovers of his transactions including those in the course of inter-State tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the return where one has been submitted, determine the turnover to the best of his judgment, and provisionally assess the tax or taxes payable for the month or quarter, as the case may be and shall serve upon the dealer a notice in form CST VII and the dealer shall pay the sum demanded at the time and in the manner specified in the notice: Provided that if for any reason the determination of provisional assessment of tax or taxes payable for any month or quarter is not completed on or before the receipt of the return for the succeeding month or quarter, as the case may be, the assessing authority may in his discretion provisionally assess in a single order the tax or taxes payable for all such months or quarters as the case may be and serve upon the dealer a notice in form CST VII and the dealer shall pay the sum demanded within the time and in the manner specified in the notice. 14A. (4A): Omitted. 14A. (5): If the return or returns are filed within the prescribed time by the dealer and such return or returns are found in order, the return or returns shall be accepted as self-assessment, subject to adjustment of any arithmetical error, apparent on the face of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not prescribe any period of limitation but rule 11(1) thereof stipulates that the period of turnover in relation to any dealer liable to pay CST shall be the same as the period in respect of which he is liable to submit returns under the State law. The Central Rules have been made in exercise of the powers under section 13(1) of the CST Act. Section 13(3) empowers the State Government to make Rules not inconsistent with the provisions of the CST Act and the Central Rules. As the CST Act or the Central Rules are silent with regard to the limitation, one has to look to the State Rules alone and there is no dispute that rule 14A of the State Rules is comprehensive and deals with the obligation of a dealer to file returns, the assessment of such returns and the period during which the competent officer can undertake assessment. We have quoted rule 14A of the State Rules extensively supra and we shall analyse the same hereinbelow. Every dealer shall submit the return in form CST-VI so as to reach the assessing authority on or before 20th of every month along with a receipt from District treasury or crossed demand draft for full payment of tax payable for the month to which the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-rule (8). If this construction is not adopted it would amount to giving extended meaning to legal fiction in sub-rule (5A) which is not permissible rule of interpretation. A legal fiction is a legislative device created for a specified and definite purpose of clarifying the context or a situation for the purpose of applicability or inapplicability or some times for enlarging the scope of the provision. It is not necessary to refer to the case law which is galore. Suffice to extract hereinbelow the passage from the recent Full Bench judgment dated November 25, 2011 of this court to which both of us are members in State of Andhra Pradesh v. Seven Hills Constructions [2012] 54 VST 66 (AP) [FB] (TRC No. 274 of 2001 and batch) (page 93 in 54 VST): A legal fiction is created only for some definite purpose. The fiction is to be limited to the purpose for which it was created, and should not be extended beyond that legitimate field. A legal fiction presupposes the existence of the state of facts which may not exist, and then works out the consequences which flow from that state of facts. Such consequences have got to be worked out only to their logical extent having due regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appellate Deputy Commissioner (CT) [2011] 44 VST 189 (AP); [2011] 53 APSTJ 1, a Division Bench of this court to which one of us is a member (VVSR,J) explained this principle which we may quote hereunder (pages 223 and 224 in 44 VST): A harmonious construction of a provision, which subserves the object and purpose for which the provision is intended to serve, is permissible provided it does not cause violence to the language of the provision, (Oxford University Press v. Commissioner of Income-tax [2001] 247 ITR 658 (SC); AIR 2001 SC 886, Administrator, Municipal Corporation, Bilaspur v. Dattatraya Dahankar AIR 1992 SC 1846), and when a literal meaning may result in absurdity. Courts must, however, keep in mind that an interpretation which reduces one of the provisions to a dead letter or useless lumber is not harmonious construction. To harmonise is not to destroy any statutory provision or to render it otiose. (Sultana Begum v. Prem Chand Jain [1997] 1 SCC 373). In construing enacted words courts are not concerned with the policy involved or with the results, injurious or otherwise, which may follow from giving effect to the language used. Even if the literal interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each month of the year cannot be accepted on plain construction of the said rule. The patent difference in the language used in the phrase if no assessment is made within a period of four years from the date of filing of the return used in sub-rule (5A) and the phrase within a period of four years from the expiry of the year to which the turnover relates appearing in subrule (8)(b) make it very clear that an assessment undertaken under rule 14A(8)(b) should be within four years from the expiry of the year to which the turnover relates. In that view of the matter, the submission made by the petitioner that except in regard to the returns filed for the months of March, 2007, the assessment in respect of returns for the months of April 2006-March 2007 is barred by limitation cannot be accepted. The returns for the months of April, 2006 to March, 2007 or the returns relate to the turnover of the financial year 2006-07, and therefore, the assessment order passed on March 30, 2007, is well within the limitation. It is not barred by limitation. The feeble submission that the impugned assessment order was antedated has not been substantiated and therefore, we reject the same. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sold is cotton terry towels and not fabric. The CTO, Autonagar Circle, Vijayawada verified machinery of the dealers and noticed that the petitioner was producing cotton terry towels in different lengths. The CTO also relied on the fact that the entire export sales disclosed by the dealers were in respect of cotton terry towels only. Accordingly while treating the export sales as exempt from tax, the CTO levied tax at 10 per cent on inter-State sales not covered by C forms as well as other sales and raised demand for ₹ 1,97,065. The counsel for the petitioner would contend that the petitioner is a dealer manufacturing and marketing terry towelling fabrics and, therefore, the same is exempt under entry 45 of the First Schedule to the VAT Act; the cotton terry towelling fabric is liable to basic excise duty as mentioned in Chapter heading 58 of the Central excise tariff and also liable to additional excise duty and, therefore, the goods manufactured by the petitioner are exempt under entry 45 of the First Schedule to the VAT Act read with Explanation appended to the said Schedule; even though cotton towels are included in entry 52 of the Fourth Schedule to the VAT Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 52 of the Fourth Schedule as they appeared at the relevant time. I Schedule Entry 45 Cotton fabrics, manmade fabrics, woollen fabrics and textile made ups. IV Schedule Entry 52 Readymade garments (bed sheets), pillow covers, towels, blankets, travelling rugs, curtain, . . . laces, terry embroidery articles and all other made ups. Section 7 of the VAT Act exempts goods listed in the First Schedule from VAT. As per entry 45 it is cotton fabrics which are exempted and not towels. Towels fall under entry 52 of the Fourth Schedule. Therefore whenever a dealer seeks exemption for cotton fabrics as falling under entry 45 of the Fourth Schedule it is for the assessment officer to enquire into the same. In this case, it is neither disputed nor denied by the petitioner that the CTO, Autonagar Circle, Vijayawada, inspected the petitioner's machinery and found that they were producing terry towels. Secondly in their objections filed after receiving show-cause notice the petitioner admitted of effecting sales of cotton terry towels. Further it was found that most of the sales were made to hotels and ..... 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