2026 (2) TMI 467 - HC - VAT / Sales Tax

Form A 5 compliance in tax exemption claims: revisional inquiry upheld; failure to prove principal's tax payment led to dismissal.

Revisional power to reopen an assessing authority's acceptance of a Form A-5 declaration is lawful where the declaration fails procedural requirements; ... Validity of revisional power exercised under inherent/suo motu revision - Claimed exemption on a turnover - towards commission sales of tamarind - requirement of Form A-5 bearing the official seal of the assessing authority - compliance with Rule 17-C of Andhra Pradesh General Sales Tax Rules, 1957 - burden to prove payment of tax by the principal to claim exemption - HELD THAT:- It is the case of the petitioner that the Deputy Commissioner ought not to have exercised the revisional power on mere suspicion and doubt against Form A-5 declaration filed by the petitioner. The counsel for the petitioner would submit that once the assessing authority has accepted the genuineness of the certificate/declaration filed by the petitioner, the revisional authority cannot conduct a fresh enquiry. He would further contend that no opportunity was granted to the petitioner, so as to get the defects corrected in respect of Form A-5 furnished by the petitioner. It is further case of the counsel for the petitioner that there is no taxable event occurred in the hands of the petitioner either in entry-170 of I schedule or under entry-14 of II schedule, even assuming that the certificate submitted by the petitioner is not valid. Admittedly the declaration form filed by the petitioner does not bear such signature and therefore the same cannot be treated to have been filed in tune with Rule 17-C (1) & (2) of Andhra Pradesh General Sales Tax Rules, 1957. Admittedly, nothing is placed on record to prove that the principal of the petitioner has paid tax in relation to the disputed turnover, so as to claim exemption by the petitioner. Admittedly, the petitioner not filed declaration form A-5 as per Rule 17 nor placed before the authority to show that its principal paid the tax on the disputed turn over, so as to claim exemption. This Court does not find any illegality or infirmity either in the order of revision or the order passed by the Tribunal. Viewed from any angle, there are no merits in the revision petitions and accordingly the same are dismissed. Issues: (i) Whether the revisional authority rightly exercised suo motu power under Section 20(2) to withdraw exemptions allowed by the assessing authority on the ground that the Form A-5 declaration did not bear the official seal as required by Rule 17-C of the Andhra Pradesh General Sales Tax Rules, 1957; (ii) Whether exemption from tax could be sustained in the absence of evidence that the principal had paid tax on the disputed turnover.Issue (i): Whether the declaration in Form A-5 not bearing the official seal of the assessing authority satisfies Rule 17-C(1) & (2) and whether revision under Section 20(2) was validly exercised to withdraw the exemption.Analysis: Rule 17-C(2) requires that declaration forms used under sub-rule (1) shall be serially numbered, maintained in book form and shall bear the official seal of the assessing authority concerned. The declaration produced did not bear the official seal as mandated. The requirement of the official seal is a statutory condition precedent for treating the form as valid under Rule 17-C. Given the absence of the statutory formality, the revisional authority's re-examination of the validity of the exemption rested on a material statutory defect in the declaration.Conclusion: The revisional authority validly exercised power under Section 20(2) to withdraw the exemption because the Form A-5 did not comply with the mandatory seal requirement of Rule 17-C. Conclusion is in favour of Revenue.Issue (ii): Whether exemption can be allowed in the absence of any evidence that the principal paid tax on the disputed turnover.Analysis: The statutory scheme contemplates that an agent seeking exemption must produce the prescribed declaration and demonstrate that the principal has paid tax on the relevant turnover. No material was placed on record to prove that the principal had discharged tax liability on the disputed turnover. The absence of evidence that tax was paid by the principal, combined with the invalid declaration, defeats the claim to exemption.Conclusion: The exemption cannot be sustained in the absence of proof that the principal paid tax on the disputed turnover. Conclusion is in favour of Revenue.Final Conclusion: The revisions lack merit as the statutory requirements for claiming exemption were not met and the revisional authority was justified in withdrawing the exemptions; the appellate tribunal's confirmation of the revision is unimpeachable on the record.Ratio Decidendi: A declaration in Form A-5 must comply with Rule 17-C(1) & (2) including bearing the official seal of the assessing authority, and an agent claiming exemption must produce evidence that the principal has paid tax on the disputed turnover; absence of either requirement justifies withdrawal of exemption under Section 20(2).