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M/s Sai Madhav Biotech v/s The Assistant Commissioner (CT) (LTU)., (Int)., Office of Deputy Commissioner (CT)., Warangal Division & Another

    Writ Petition No.9495 OF 2010
    Decided On, 30 July 2010
    At, High Court of Andhra Pradesh
    By, THE HONOURABLE MR. JUSTICE B. PRAKASH RAO & THE HONOURABLE MR. JUSTICE RAMESH RANGANATHAN
    For the Petitioner: M.V.J.K. KUMAR, Advocate. For the Respondents: Govt. Pleader for Commercial Taxes.


Judgment Text
(Ramesh Ranganathan, J.)


The endorsement of the 1st respondent dated 29.3.2010 is under challenge in this Writ Petition as illegal, arbitrary and ultravires Section 72 of the A.P.V.A.T. Act, 2005 (hereinafter referred to as ?the Act?). The petitioner seeks a consequential direction to the 1st respondent to consider his representation dated 11.03.2010, and to redress his grievance.


Facts, in brief, are that the petitioner, a registered dealer on the rolls of the 1st respondent, is a partnership firm engaged in the manufacture and sale of organic manure developed on plant wastage namely neem fruits. The petitioner would submit that organic manure is exempt from tax under Entry 26 of the First Schedule read with Section 7 of the Act. Relying on a decision of the Advance Ruling Authority, in ?M/s Jyothirmayi Neem Products, Mangalagiri?, classifying neem fruit based powder, sold as organic manure, as bio-fertilizers and assessing it to tax at 4%, the 1st respondent issued notice dated 17.2.2009 calling upon the petitioner to show cause why the goods in question should not be taxed, and the exemption claimed by the assessee not be denied. The petitioner submitted their objections thereto. In the order of assessment dated 26.2.2010, the assessing authority held that the clarification of the Advance Ruling Authority, in ?M/s Jyothirmayi Neem Products, Mangalagiri dated 30.11.2007?, was binding on all officers other than the Commissioner and, in view of the clarification, the proposed levy of tax at 4% was being confirmed. The petitioner was called upon to pay tax of Rs. 6,43,177/- within 30 days from the date of service of the order, and was informed that an appeal lay against the order of assessment, under Section 31(1) of the Act, within 30 days of receipt thereof.


The petitioner submitted an application on 11.3.2010, under Section 72 of the Act, requesting the assessing authority to re-examine the issue. In his endorsement dated 29.3.2010, the 1st respondent observed that he was not competent to review the matter already finalized; and the petitioner should, instead, have filed an appeal under Section 31(1) before the competent authority within the stipulated time. It is this order of the 1st respondent dated 29.3.2010 which is the subject matter of challenge in this Writ Petition.


The petitioner would submit that the clarification of the Advance Ruling Authority, in ?M/s Jyothirmayi Neem Products, Mangalagiri?, was assailed before the Sales Tax Appellate Tribunal (STAT); the STAT referred to the provisions of the Fertilizer Control order, and declared that the products developed from plant based waste, or animal based waste, was organic manure; the order of the STAT in Asian Bio-chemicals, Vijayawada v. State of Andhra Pradesh (2009) 49 APSTJ 30 is binding on the assessing authority; and, since the STAT had not concurred with the advance ruling authority, the order of the assessing authority was illegal. The petitioner would contend that, though the Act provided for an appeal, Section 72 of the Act enables an application to be filed before the assessing authority (1st respondent) requesting him to set aside the order of assessment, as the said order had caused them material hardship, and had occasioned failure of justice.


The order of assessment is not under challenge in this Writ Petition. It is, therefore, wholly unnecessary for this Court to examine whether or not the clarification issued by the Advance ruling authority has been set aside by the STAT; and, if so, whether the assessing authority was justified in relying on the clarification of the Advance ruling authority in denying the petitioner the exemption claimed by them. The only question which necessitates examination is whether the assessing authority (1st respondent) was justified in refusing to examine the petitioner?s request, made under Section 72 of the Act, on the ground that he was not competent to review the order already finalized; and that the remedy available to the petitioner was only by way of an appeal.


Section 72 of the Act reads as under:


?No assessment made, penalty or compounding fee levied or other order passed by any officer or authority under Act shall be set aside merely on account of any defect or irregularity in the procedure relating thereto, unless it appears that such defect or irregularity has in fact occasioned material hardship or failure of justice?


The mode prescribed under the Act, to have an assessment order set aside, is only by way of an appeal. Section 31(1) of the Act provides for an appeal, against the order of assessment, to the Appellate Deputy Commissioner, and Section 33(1)(a) a further appeal to the Sales Tax Appellate Tribunal. Where a court or a quasi-judicial authority, having jurisdiction to adjudicate on merits, proceeds to do so, its judgment or order can be reviewed on merits only if the court or the quasi-judicial authority is vested with the power of review either by express provision or by necessary implication. (Kapra Mazdoor Ekta Union v. Birla Cotton Spg. and Wng. Mills Ltd., (2005) 13 SCC 777). A quasi-judicial authority cannot review its own order, unless the power of review is conferred on it by the Statute under which it derives its jurisdiction. (Kuntesh Gupta v. Hindu Kanya Mahavidyalaya (1987) 4 SCC 525). The power of review is not an inherent power. It must be conferred by law either specifically or by necessary implication. (Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji (1971) 3 SCC 844; Kewal Chand Mimani v. S.K. Sen (2001) 6 SCC 512). No provision in the Act has been brought to our notice from which it can be gathered that the assessing authority has the power to review the assessment order passed by him earlier. The question whether the assessment order suffers from an error of fact or law cannot be examined by the assessing authority himself as the Act, neither expressly nor by necessary implication, has conferred on him the power to review his own orders.


Section 72 of the Act is not a source of power for the assessing authority to review the assessment order passed by him earlier. The said provision merely prohibits an order, such as an assessment order, being set aside merely for a defect or irregularity in procedure, except where such a defect or irregularity has occasioned material hardship or failure of justice. As the assessing authority under the Act has not been conferred the power of review, Section 72 does not enable an assesse to file an application requesting him to set aside the assessment order passed by him earlier. Section 72 has no application in all cases where the assessment order is sought to be set aside in appeal or revision. The said provision would come into operation only where an order passed by any officer or authority under the Act is sought to be set aside, on account of any defect or irregularity in procedure relating thereto. Section 72 is a restriction on the powers of the appellate authority/STAT in interfering with, among other orders, an assessment order on the ground that there is a defect or an irregularity in the procedure followed in passing the said order. In view of Section 72, an assessment order cannot be set aside by the appellate authority or the STAT for every defect or irregularity in procedure. It is only if such a defect or irregularity in procedure has resulted in an order being passed which has caused material hardship, or has occasioned failure of justice, would interference be justified. For instance when an appeal is preferred, against the order of assessment, Section 72 would comes into play and the appellate authority and the STAT are disentitled from setting aside the assessment order merely on account of any defect or irregularity in the procedure followed by the assessing authority in passing the said order, unless the appellate authority/STAT is satisfied that such defect or irregularity has caused material hardship, or has occasioned failure of justice. In the absence of a power of review, Section 72 cannot be pressed into service before the assessing authority himself. Once an order of assessment is passed, the statutory remedy available to an assessee, to question the validity of the assessment order, is only by way of an appeal, and not under Section 72 of the Act.


The endorsement of the 1st respondent, refusing to entertain the application filed by the petitioner under Section 72 of the Act, does not, therefore, necessitate interference in proceedings under Article 226 of the Constitution of India. We make it clear that we have not examined the merits of the contentions urged bef

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ore us by Sri M.V.J.K. Kumar, Learned Counsel for the petitioner, and have limited our examination only to the scope and effect of Section 72 of the Act, and the validity of the endorsement of the assessing authority refusing to entertain the application submitted by the petitioner, based on Section 72 of the Act, on the ground that the Act does not empower him to review his order. Any grievance which the petitioner may have on the merits of the assessment order, must, ordinarily, be canvassed in appeal. Even otherwise, it would be wholly inappropriate for us to examine the merits of the assessment order dated 26.2.2010 as it is not the subject matter of challenge in this Writ Petition. The Writ Petition fails and is, accordingly, dismissed. Needless to state that this order shall not preclude the petitioner from availing such other remedies as are available to them in law to question the merits of the order of assessment dated 26.2.2010. No costs.
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