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2015 (6) TMI 183 - ANDHRA PRADESH HIGH COURT

2015 (6) TMI 183 - ANDHRA PRADESH HIGH COURT - [2015] 377 ITR 622 (T&AP) - Recovery of tax due without issuing notice u/s 156 - Challenge to prohibitory orders and warrant of attachment of moveable property - whether any recovery proceedings can be initiated against the writ petitioner for the alleged income tax dues as claimed by the Revenue - carrying on business on behalf of the State of Telangana in respect of sale of Indian Made Liquor and Foreign Liquor - restraining the petitioner from se .....

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and State of Telangana in the manner as provided in Section 53 of Act, 2014. Section 53 provides subject to the agreement the aforesaid assets and liabilities of the Corporation, shall stand apportioned on the basis of population ratio. The petitioner has not acquired nor can acquire in view of above legal position any property from APBCL nor the liability thereof. The State of Telangana has acquired these assets and properties and liability of APBCL, being the recorded assessee proportionately. .....

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and wrongful action cannot be precedent, furthermore there cannot be estoppel as against provision of law. - actions taken by the Revenue against the writ petitioner are without jurisdiction and wholly illegal.

In the event, State of Telangana does not pay the proportionate liability of the tax dues for the assessment year 2012-13 or previous thereto, if any, it would be open for the respondents to recover the same from the State of Telangana, since It is to share the proportionate l .....

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t Solicitor General of India Counsel and Sri J V Prasad Standing Counsel ORDER (Per the Honble The Chief Justice Sri Kalyan Jyoti Sengupta) The above two writ petitions have been filed challenging the prohibitory orders and warrant of attachment of moveable property issued by the 2nd respondent on 28.02.2015. 2. The factual and legal grounds of challenge in the aforesaid petitions are similar and identical. The petitioner has been incorporated under the provisions of Companies Act, 2013 on 30.05 .....

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course of carrying on such business, on 27.2.2015 the aforesaid prohibitory orders and warrant of attachment of moveable property were issued restraining the petitioner from selling the liquor stock, which is the property of State of Telangana. The said prohibitory orders were issued contending incorrectly that the petitioner is the successor in business of Andhra Pradesh Beverages Corporation Limited (APBCL) under the provisions of Andhra Pradesh Reorganization Act, 2014 (hereinafter referred .....

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ment for the assessment year 2012-2013, and till date the petitioner does not receive any copy of the assessment orders for the same assessment year. As such, the 2nd respondent has no jurisdiction to commence tax recovery proceedings against the petitioner, as no notice was served on the petitioner during the assessment proceedings nor any assessment order was served upon the petitioner. No notice of demand was served upon the assessee under Section 156 of the Act, 1961. Since the respondents 2 .....

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ioner has not received copy of the aforesaid Tax Recovery Certificate. In any event, the tax recovery certificate is totally inapplicable to the petitioner as it is with reference to some other assessee. The Permanent Account Number, as stated in the tax recovery certificate, does not belong to the petitioner. As such, the petitioner cannot be considered to be an assessee in default. Under Section 222 read with second Schedule of the Act, 1961, attachment of moveable property can be done only in .....

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cond schedule of Act, 1961 by serving the form in ITCP No.1, the respondents have no jurisdiction to commence the tax recovery proceedings by issuing the impugned prohibitory orders. The prohibitory orders were issued without complying with the condition in Rule 20 of the second schedule of the Act, 1961. Under Rule 20 (2), the Tax Recovery Officer has to serve a warrant in writing specifying the name of the defaulter and the amount to be realized. The impugned prohibitory orders were issued wit .....

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show that the property, which is sought to be attached, belong to the State of Telangana, and not to the petitioner herein. The petitioner is not the successor in business of APBCL. The respondents never treated the petitioner as the successor of APBCL for the assessment proceedings 2012-13. The respondents also did not treat the petitioner as the successor of APBCL for the purpose of serving assessment order. Nonetheless, the respondents treated the petitioner as successor of APBCL only for the .....

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y the 2nd respondent, it has been stated to justify the aforesaid order that the petitioner is the successor in business of APBCL as per Section 53 read with Section 68 of the Act 2014, in respect of the territories falling in the State of Telangana. As a result of reorganization of the State, as per State Government G.O.Ms.No.187, Revenue (Ex.II) Department, dated 16.5.2014, a new Corporation was incorporated in the name and style of M/s. Telangana State Beverages Corporation Limited (TSBCL), h .....

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it Petition No.22430 of 2014 the petitioner has a share of liability amounting to ₹ 83,36,00,000/- on 6.11.2014 which is 41.68% of the total amount paid by both the Corporations aggregating to ₹ 200 crores. The income tax demand was raised for the assessment year 2012-13 i.e., financial year 2011-12 during which time TSBCL does not exist. The petitioner is estopped from denying the liability of income tax demand as it had already accepted by paying its share of demand pertaining to a .....

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r 2012-13, part of the assets and liabilities of the assessee, APBCL, stood transferred to the petitioner herein under Act 6 of 2014. Technically, no notice of demand was served on the petitioner under Section 156 of the Act, 1961 as the assessment order was passed for the assessment year 2012-13 during the accounting period relevant for the assessment year, when the petitioner herein was not in existence. The petitioner was incorporated only during the financial year 2014-15. It is contended th .....

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. As per the provision of Section 170 (3) of the Act, 1961, the assessing officer has recorded its finding vide letter dated 18.2.2015 wherein it was stated that IML/FL sale proceeds, including the margins, are directly being credited into the treasury account of the State Government as per G.O.Ms.No.614, Revenue [Ex.II (2)] Department, dated 6.5.2005. A clear finding was recorded by the assessing officer that the income tax dues pertaining to the share of TSBCL, successor in business, has to be .....

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le 2 of the second schedule to the Income Tax Act has been issued to the assessee. Even though the tax recovery certificate was drawn in the name of the predecessor, APBCL, the petitioner being the successor in business to APBCL in respect of the territorial jurisdiction of the State of Telangana, the liability pertaining to its share has to be paid by the petitioner as it has already received the assets from APBCL. Hence, there is no violation of provision of Section 222 or Rule 2 or Rule 20 of .....

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itself agreed that as per the Scheme of Distribution of Assets and Liabilities, including those of income tax, the same was approved by G.O.Ms.No.239, dated 27.5.2014. 4. The learned Advocate General appearing for the writ petitioner in both the writ petitions, while placing the above fact, submits that the writ petitioner is a separate legal entity and it came into being after the relevant assessment years, for which the alleged recovery proceedings initiated against the petitioner. Admittedly .....

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ar from the aforesaid two Sections that there must be an assessment order against the assessee, followed by the notice of demand under Section 156 of Act, 1961, in case of failure of complying with the same the recovery proceedings can be started. Admittedly no assessment order has been passed against the petitioner nor the petitioner is a deemed assessee in default. The order of attachment or restraint order is also not in consonance with Section 222 read with Rule 26 (1) (ii) of the second sch .....

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of Section 226 (3) (iii) read with Section 170 (3) of the Act, 1961, the proportionate share of the liabilities can be recovered from the writ petitioner. It would appear from the records that the petitioner is the successor in interest as far as the assets and properties and businesses are concerned. Therefore, notices issued and order of attachment made are perfectly justified under the law. 7. After hearing the learned counsel for the parties and considering the statements and averments made .....

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nancial year 2011-12 and assessment year 2012-13. At that time the petitioner was not in existence. Admittedly the petitioner is not an assessee nor a deemed assessee or a default assessee. No assessment order was passed against it nor any notice of demand was issued. 9. Going by the legal provision as mentioned in Section 156 of Act, 1961, the recovery proceedings cannot be initiated against the petitioner. Therefore, apparently, notices are absolutely illegal and invalid as the same are issued .....

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43 or sub-section (1) of section 200A, the intimation under those sub-sections shall be deemed to be a notice of demand for the purposes of this section. 10. Now, looking at the provision of clause (ii) of sub-section (3) of Section 226 of the Act, 1961, as urged by Mr. Prasad, whether we can conclude the writ petitioner as a person holding any money for or on account of the assessee, so much so the tax can be recovered from It, in respect of the dues of APBCL is concerned. We think, on the fact .....

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of State undertakings:- (1) The assets and liabilities relating to any commercial or industrial undertaking of the existing State of Andhra Pradesh, where such undertaking or part thereof is exclusively located in, or its operations are confined to, a local area, shall pass to the State in which that area is included on the appointed day, irrespective of the location of its headquarters: Provided that where the operation of such undertaking becomes inter- State by virtue of the provisions of Par .....

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d to by the successor States. 68. Provisions for various companies and corporations:- (1) The companies and corporations specified in the Ninth Schedule constituted for the existing State of Andhra Pradesh shall, on and from the appointed day, continue to function in those areas in respect of which they were functioning immediately before that day, subject to the provisions of this section. (2) The assets, rights and liabilities of the companies and corporations referred to in sub-section (1) sh .....

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s not acquired nor can acquire in view of above legal position any property from APBCL nor the liability thereof. The State of Telangana has acquired these assets and properties and liability of APBCL, being the recorded assessee proportionately. Therefore, it is absurd to contend that the writ petitioner is the successor in interest of APBCL. It is absolutely separate legal entity, as rightly contended by Mr. K. Ramakrishna Reddy, the learned Advocate General appearing for the writ petitioner, .....

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