2025 (12) TMI 705 - HC - VAT / Sales Tax

Assessing Officer bound by appellate order; cannot deny entry tax set-off under G.O.Ms.552, 554 in remand

HC held that the Assessing Officer, in remand proceedings, lacked jurisdiction to revisit the Appellate Deputy Commissioner's findings on entitlement to ... Jurisdiction of assessing officer in remand proceedings - reduction of tax collected on purchase of raw material, on the tax leviable on sale of the finished products in interstate sales - eligibility for set off of entry tax on the purchase of raw material - G.O.Ms.No.552 dated 12.09.2002 and G.O.Ms.No.554 also dated 12.09.2002 - HELD THAT:- Undoubtedly the Appellate Deputy Commissioner had reversed the remand order of the Assessing Officer dated 29.03.2007 vide his order dated 06.12.2007. The operative part of the order is that which has already been reproduced in the preceding paragraphs. As has been discussed earlier, it has been categorically held by the Appellate Deputy Commissioner that the tax paid on the purchase of raw material used by the petitioner would be available for them for set off and second that the remand was only to the extent of making quantification by the Assessing Officer. It would be relevant at this juncture to refer to the judgment of the Hon’ble Supreme Court in the case of UNION OF INDIA vs. KAMALAKSHI FINANCE CORPORATION LTD [1991 (9) TMI 72 - SUPREME COURT] wherein, the Hon’ble Court while dealing with similar situation where a subordinate officer took an entirely contrary view that which was passed by the superior officer, has held that 'It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit.' In the instant case also, once when the matter had travelled to the Appellate Authority and the Appellate Authority having expressed his opinion and had partly allowed the appeal, the said order could not be put to challenge or review by a subordinate officer or an inferior forum than the Appellate Deputy Commissioner. The Assessing Officer to whom the matter stood remanded could have only expressed his powers to the extent of the directions given by the Appellate Deputy Commissioner that was for quantifying of amount of entry tax paid by the petitioner on the purchase of raw material. The Assessing Officer, under no circumstances, could have travelled beyond the directions given by the Appellate Court. The stand taken by the Assessing Officer is not proper, legal and justified. The impugned order deserves to be and is, accordingly, set aside - Petition allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the Assessing Officer, on remand, was competent to reconsider and deny the assessee's entitlement to set off of entry tax on purchase of raw material, in the face of a binding appellate order confining the remand to quantification. 1.2 What is the scope of the Assessing Officer's jurisdiction pursuant to a remand order of the Appellate Authority and the extent to which judicial discipline requires adherence to such directions. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Jurisdiction of Assessing Officer on remand and binding nature of appellate directions Legal framework 2.1 The Court noted that the Appellate Deputy Commissioner had partly allowed the appeal, specifically holding that, in terms of G.O.Ms.No.552 and G.O.Ms.No.554 (both dated 12.09.2002), the assessee was entitled to set off of entry tax paid on purchase of raw material, and had remanded the matter to the Assessing Officer only for quantification of the entry tax paid and for granting relief 'as per law'. 2.2 The Court referred to the revisional power of the department under Section 20 of the Andhra Pradesh General Sales Tax Act, 1957 as the appropriate statutory remedy if the department was aggrieved by the appellate order. 2.3 The Court relied on the principles laid down by the Supreme Court in UNION OF INDIA v. KAMALAKSHI FINANCE CORPORATION LTD., emphasizing that subordinate authorities are bound by orders of superior appellate authorities and cannot refuse to follow them on the ground of disagreement, and that the revenue authorities have statutory remedies to challenge such orders if considered adverse. Interpretation and reasoning 2.4 The Court found that the Appellate Deputy Commissioner had categorically accepted the assessee's eligibility for set off of entry tax on raw materials and had limited the remand strictly to the task of quantification of the entry tax paid and the corresponding relief to be granted. 2.5 The Court observed that the Assessing Officer, instead of confining himself to quantification, re-examined and rejected the assessee's entitlement to set off by reinterpreting the expression 'raw materials like Aluminium, white cement, Atta, Maida, Sooji, Ravva and Wheat Flour' in G.O.Ms.No.552 and G.O.Ms.No.554, concluded that the benefit was restricted only to those specified categories and did not extend to components such as compressors and condensers, and thereby declined the set off. 2.6 The Court held that this approach amounted to: (i) travelling beyond the limited scope of remand, which was only for quantification; (ii) virtually sitting in appeal over, and testing the correctness of, the Appellate Deputy Commissioner's findings; and (iii) exercising jurisdiction that the Assessing Officer did not possess, as he was an officer subordinate to the Appellate Authority. 2.7 The Court reasoned that, once the Appellate Authority had decided the issue of entitlement to set off in favour of the assessee, the Assessing Officer was bound to implement that decision and could not reopen or revisit that settled issue. If the department believed the appellate view to be erroneous or prejudicial to revenue, its only lawful recourse was to invoke the revisional jurisdiction under Section 20 of the Andhra Pradesh General Sales Tax Act, 1957, and not to disregard or contradict the appellate order at the subordinate level. 2.8 Referring to the Supreme Court's observations in KAMALAKSHI FINANCE, the Court underscored the need for 'utmost regard' to judicial discipline and emphasized that disobedience of binding appellate orders by subordinate authorities causes harassment without any lawful benefit to the Revenue, particularly where statutory remedies are available to the department. Conclusions 2.9 The Court held that the Assessing Officer's act of reconsidering and denying the assessee's entitlement to set off, despite a contrary and binding finding of the Appellate Deputy Commissioner, was per se in excess of jurisdiction and contrary to the scope of the remand. 2.10 The Court declared that the Assessing Officer could not, under any circumstances, travel beyond the directions and findings recorded by the Appellate Authority, and his role was confined to quantifying the entry tax paid on the purchase of raw materials and granting the corresponding relief in accordance with the appellate order. 2.11 The impugned order of the Assessing Officer dated 28.05.2008 was set aside as not proper, legal or justified, and the Assessing Officer was directed to strictly comply with the Appellate Deputy Commissioner's order dated 06.12.2007, limiting himself to quantification of the entry tax and grant of relief accordingly. The writ petition was allowed, with no order as to costs.