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2016 (6) TMI 631 - ANDHRA PRADESH HIGH COURT

2016 (6) TMI 631 - ANDHRA PRADESH HIGH COURT - TMI - E-Fraud - Andhra Pradesh Value Added Tax, 2005 (AP VAT) - validity of assessment order - principle of natural justice - E-way bills were generated in the name of petitioner, but in fact they were not generated by the petitioner from the AP VAT portal. - The main endeavor of the learned counsel for the petitioner is that the petitioner is not liable to pay VAT and CST as the petitioner did not generate the E-way bills except two CST E-way bills .....

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offence, till it is proved beyond reasonable doubt before the criminal court, it is difficult to accept the contention of the petitioner. Therefore, in those circumstances, the petitioner who was provided with user ID and password and maintaining privacy of the account as per the norms affixed by the Central Government, the petitioner cannot be exonerated from liability to pay tax on the turnover covered by E-way bills which was generated by the petitioner. Therefore, we find no ground to exerci .....

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eriod from 01.01.2015 to 09.06.2015 under the provisions of Andhra Pradesh Value Added Tax, 2005 (for short, AP VAT ACT, 2005) is without jurisdiction, arbitrary and violative of principles of natural justice. 02. The petitioner is a registered dealer on the rolls of the first respondent with effect from 01.01.2015 and is in the business of cutting and polishing of rough granites and sale of polished granites. While the petitioner is still in the process of constructing buildings etc., and erect .....

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with the petitioner in unearthing the fraud committed by the unknown persons, informed that the petitioner did not generate E-way bills except two E-way bills, which were used for purchase of machinery and spares. While the petitioner taking necessary steps to find out who generated E-way bills, the petitioner received a notice from the first respondent dated 02.07.2015 alleging that as many as 105 E-way bills and three C-forms were generated by the petitioner during the period from 16.04.2015 t .....

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ring investigation, the Inspector of Police arrested the accused, produced before the Special Judicial Magistrate of First Class, Excise, Ongole, along with the remand report, having found prima facie material against the accused who hacked the official website of Commercial Taxes Department by securing access to the accounts of the petitioner, who is about to start business by resetting the account user ID and password, and it is still under investigation. 04. Since the complaint is under inves .....

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e and that the said Assessment Order is illegal, arbitrary and violative of principles of natural justice, since the first respondent passed the said order without conducting inquiry into the actual generation of E-way bills. Hence, prayed for the aforesaid reliefs. 05. The respondents filed counter affidavit denying the material allegations, while admitting about issue of show cause notice, receipt of reply to the show cause notice, passing of Assessment Order dated 27.11.2015, assessing the pe .....

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ides Revanth Exports, Budawada Village, Chimakurthy Mandal, Prakasam District. 06. The respondents issued audit notice in Form VAT 304, dated 09.06.2015 and requested the petitioner to make available all records pertaining to all business activities for verification. The authorized representative of the petitioner gave statement before the respondent on the said date informing that the proprietor of the firm, Smt. Vem Bhadramma, is residing at Warangal and would shortly intimate her availability .....

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same was not reflected in the monthly returns filed under the AP VAT Act, 2005. 07. The first respondent also issued show cause notice proposing the petitioner subject the above turnover to tax by adding gross profit @ 5% and arrived at the notional sale value of ₹ 1,00,97,470/- and proposed to subject the same to tax @ 14.5% amounting to ₹ 14,64,133/- and the petitioner filed objections and also received a letter on the same day wherein it was contended that some unknown persons log .....

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was enclosed to the writ petition. The complaint discloses that the petitioner made an attempt to download the E-way bill, the said account was not getting opened and therefore they got the password reset and obtained new password from the Department on 19.05.2015 and when the petitioner made an attempt to download another E-way bill on 08.06.2015, they encountered the same problem and the petitioner s account was not opened. Thus, the allegations made in the FIR are totally in variance with th .....

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2579391. It is again noticed on 09.06.2015 the account of the petitioner was not open when the petitioner tried to download E-way bill, again reset the password for second time and generated E-way bill No.371506099158194. It is the contention of the petitioner that when they tried to generate E-way bill on 19.05.2015 the account was not getting opened, but the petitioner filed its monthly return for the month of April, 2015 on 19.05.2015. It is evident that the petitioner was able to access the .....

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to his account in the website of Commercial Taxes Department on 19.05.2015 as well as on 09.06.2015, generated E-way bills periodically, but when it was noticed by the first respondent about generating huge quantity of E-way bills the petitioner alleged to avoid tax liability and the said complaint is frivolous. Therefore the first respondent rightly passed the impugned Assessment Order under AP VAT Act, 2005 and not liable to be quashed. 09. One of the contentions of the first respondent is tha .....

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almost reiterating the allegations made in the writ petition regarding the purchase of machinery under two CST E-way bills generated by the petitioner while denying generation of 103 Eway bills periodically during the assessment period and filing of frivolous complaint etc., and annexed the press note and news item published in Eenadu, Andhra Jyothi, Sakshi Telugu daily, and Business Standard and other newspapers. 11. During the course of hearing, Sri P. Vishnuvardhan Reddy, learned counsel for .....

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estigation in the case, and prayed to set aside the same. 12. Per contra, Sri S. Suri Babu, learned standing counsel for the Commercial Taxes, contended that the petitioner logged to the account of the petitioner and generated 105 E way bills, evidencing purchase of ceramic tiles and machinery etc., amounting to ₹ 96,16,638/-, but in the returns, the petitioner did not disclose generation of any E-way bills under AP VAT Act, 2005 or under CST Act, 1956, admitted generation of 2 CST Eway bi .....

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fore, the petitioners are liable to pay tax to the respondents and that when the petitioner did not approach the Court with clean hands, discretionary relief under article 226 of the Constitution of India cannot be granted and prayed for dismissal of the writ petition. 14. The petitioner is registered as TOT dealer undisputedly, but his contention before us is that it has not commenced its business, installing machinery etc., and business is at the feotus stage. If the business is not commenced .....

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oner and the person who knows the user ID and password alone can access the account of the petitioner with the Commercial Taxes Department Website. But the contention of the petitioner is that the third parties hacked the website of Commercial Taxes Department, logged on to the account of petitioner, generated 105 E-way bills. 15. In fact, as per the provision of AP VAT Act, 2005 and Rules framed the Department introduced the system of generating E-way bills to ensure the collection of tax from .....

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Government in a particular manner; b) the issue or grant of any licence, permit, sanction or approval by whatever name called in a particular manner; c) the receipt or payment of money in a particular manner, then, notwithstanding anything contained in any other law for the time being in force, such requirement shall be deemed to have been satisfied if such filing, issue, grant, receipt or payment, as the case may be, is effected by means of such electronic form as may be prescribed by the appro .....

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such record is to be accepted. Section 16 of the said Act, obligates the Central Government for the purpose of Section 14 and 15 (Secure Electronic Record and Secure Electronic Signature) prescribe procedure and practice. Accordingly necessary security procedures were provided to the Commercial Taxes Website providing user ID and password to the account holder. If for any reason, the third party hacked the website, accessed to the account of the petitioner, such person is liable for punishment u .....

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the password, nothing prevented the petitioner to give complaint to the police concerned after due verification of the petitioners account. But strangely on receipt of show cause notice in Form VAT 305A, the story of third parties accessing to the account of petitioner and generation of E-way bills is invented conveniently. Maintaining silence for more than four months though 105 E-way bills were generated from the account of the petitioner is itself indicates that the petitioner is unmindful a .....

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MMODITY 1 CST371504164157060 16.04.2015 875294 Ceramic Tiles and Glazed Tiles and Earthen Tiles. 2 CST371504209633074 20.04.2015 878832 3 CST371504308265058 30.04.2015 440640 4 CST371505164319515 06.05.2015 860854 5 CST371505076598404 07.05.2015 423569 6 CST371505129693271 12.04.2015 798333 7 CST371505211408676 21.05.2015 428400 8 CST371505214231676 21.05.2015 430848 9 CST371505217780620 21.05.2015 433296 10 CST371505281211396 28.05.2015 414202 11 CST371505289067293 28.05.2015 421056 12 CST37150 .....

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ereunder: A Purchases Turnover Input tax 1. Exempt / Non Creditable Purchases NIL NIL 2. 14.5% Purchases NIL NIL 3. 5% Purchases NIL NIL B Sales Turnover Output Tax 1. Zero rated sales - International Exports NIL NIL 2. Zero rated sales (CST Sales) NIL NIL 3. 14.5% sales NIL NIL 4. 5% Sales NIL NIL Total NIL NIL 19. But on verification, the petitioner was found generation of 16 CST E-way bills for value of ₹ 96,16,638/-, purchased Ceramic tiles by M/s.Arjun Granites, therefore, assessed th .....

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r is liable to pay tax, on the estimated sale value, adding gross profit @ 5%. 21. One of the contentions by the petitioner is that the first respondent has to wait till completion of trial in the criminal case when the serious allegation is made against the third party for hacking account of the petitioner, generating of E-way bills, but the first respondent is not under obligation to wait till completion of criminal proceedings. Even otherwise, the petitioner admittedly generated two CST E-way .....

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ing power under Section 77 and 78 of AP VAT Act issued circular regarding issue of E-way bills, making it mandatory to transact business by any VAT or TOT dealer. The petitioner did not dispute transacting business by E-way bills and admitted about generating CST E-way bills from the AP Sales Tax Department web portal, but pleaded ignorance about misusing way bill till receipt of notice. When user ID and password are provided to the dealer, dealer alone is expected to generate Eway bills and nob .....

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disentitled to claim discretionary relief under Article 226 of Constitution of India consequently we are unable to exercise power of judicial review, to grant relief to the petitioner. 22. The main endeavor of the learned counsel for the petitioner is that the petitioner is not liable to pay VAT and CST as the petitioner did not generate the E-way bills except two CST E-way bills referred above on 19.05.2015 and 09.06.2015, more particularly, when those E-way bills were generated by the third p .....

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