Statutory schedule entries cannot be curtailed by HSN codes; assessment quashed and remanded for fresh consideration.

The Andhra Pradesh HC held that entry 2 of the First Schedule to the Andhra Pradesh Value Added Tax Act, 2005 could not be restricted by HSN Codes issued under G.O. Ms. No. 1615, because a statutory Schedule can be altered only through the procedure prescribed by the Act. Section 79 provides the limited mechanism for amending Schedule entries, and section 76(2) does not authorise an executive or administrative order to curtail them. As the assessment was based on an impermissible HSN-based restriction, the assessment order was set aside and the matter remanded for fresh consideration in accordance with law after hearing the assessee.

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Issues: (i) whether the assessing authority could restrict the scope of entry 2 of the First Schedule to the Andhra Pradesh Value Added Tax Act, 2005 by relying on HSN Codes issued under G. O. Ms. No. 1615 dated 31.08.2005; (ii) whether the impugned assessment order, based on such restriction, was sustainable.

Issue (i): whether the assessing authority could restrict the scope of entry 2 of the First Schedule to the Andhra Pradesh Value Added Tax Act, 2005 by relying on HSN Codes issued under G. O. Ms. No. 1615 dated 31.08.2005.

Analysis: The Schedule to the Act is an integral part of the statute and its contents can be altered only in accordance with the statutory procedure. Section 79 of the Act provides the limited mechanism for altering, adding to, or cancelling entries in the Schedules, while section 76(2) does not authorise an executive or administrative order to amend or circumscribe the statutory Schedules. Reliance on HSN Codes issued under G. O. Ms. No. 1615 to restrict the scope of entry 2 was therefore impermissible.

Conclusion: The HSN Codes could not be used to narrow or control entry 2 of the First Schedule, and the assessing authority was not justified in treating them as overriding the Schedule.

Issue (ii): whether the impugned assessment order, based on such restriction, was sustainable.

Analysis: Since the assessing authority proceeded on an illegal restriction of the statutory entry by reference to the HSN Codes, the assessment could not stand. The proper course was to set aside the assessment and require a fresh decision in accordance with law, after hearing the assessee, without reference to the impugned HSN-based limitation.

Conclusion: The assessment order was set aside and the matter was remanded for fresh assessment.

Final Conclusion: The writ petition succeeded to the extent that the assessment was quashed and the matter sent back for fresh consideration, but the merits were left open for reassessment in accordance with the statute.

Ratio Decidendi: A statutory Schedule cannot be amended or curtailed by an executive order or delegated instruction; only the procedure prescribed by the parent Act or a legislative amendment can validly alter the scope of a Schedule entry.

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