TaxTMI 
TaxTMI 
2022 (6) TMI 671
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 24.02.2022 to the fourth respondent i.e. Canara Bank, Malakpet Branch, Malakpet, Hyderabad and to others as illegal and consequently to set aside the same. 5 According to the petitioner it is a special class civil contractor registered with the Government of Telangana. It is carrying on the business of execution of civil work relating to construction of roads etc. Petitioner is a registered dealer with respondent No.2 under the Telangana Value Added Tax Act, 2005 (TVAT Act) as well as under the Goods and Services Tax (GST). 6 It is stated that for the assessment periods from the year 2014 till the year 2017, petitioner had filed monthly returns in Form VAT 200 by duly attaching Form VAT 501 along with certification of tax collection at source. It is stated that petitioner had opted for composition of tax and therefore filed applications under Form VAT 250 on monthly basis covering the aforesaid assessment periods along with the returns filed under Form VAT 200. 7 According to the petitioner it was surprised when it received notice dated 20.07.2019. It was an urgent payment notice issued by respondent No.2. Respondent No.2 stated that assessments under the VAT Act was cond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceive pre-assessment notices as contemplated under Rule 64 of the Telangana Value Added Tax Rules, 2005 (TVAT Rules). Even the assessment orders were not served upon the petitioner. Besides, it is contended that during the entire assessment period from the year 2014 to 2017 petitioner had undertaken only Government contracts for which VAT was deducted at source and Form VAT 509 was issued. Besides the entire turnover was under the composition scheme for which petitioner filed Form 250 for each work separately. Therefore, the entire turnover of the petitioner for the assessment period 2014- 2017 was assessed and tax was paid at the source itself. 9 It is under such circumstances that petitioner filed W.P.No.27866 of 2021 challenging the legality and validity of the urgent payment notice dated 20.07.2019 issued by respondent No.2 for the assessment period 2014 - 2017. 10 While the aforesaid writ petition was pending before this Court, respondent No.2 issued arrear notice dated 14.02.2022 which was followed by the garnishee notices dated 24.02.2022. The garnishee notices were issued to respondent No.4 as well as to the Branch Manager of Canara Bank, Malakpet, Hyderabad. It was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dicated the following: Sl.No. Assessment Period Total Works Contract Value Rs. Standard deduction 30% towards labour charges Taxable turnover Rs Tax payable at 14.5% Tax Paid Adjustment of tax Balance of Tax payable Rs. 1 2 3 4 5 6 7 8 9 1 2014-15 20,79,08,821 6,23,72,646 14,55,36,174 2,11,02,745 0 70,86,234 1,40,16,511 2 2015-16 47,86,30,607 14,35,89,182 33,50,41,425 4,85,81,007 0 1,67,52,088 3,18,28,919 3 2016-17 25,31,35,975 7,59,40,793 17,71,95,163 2,56,93,302 0 62,92,731 1,94,00,571 16 The above show cause notices were sent to the business address of the petitioner by way of registered post with acknowledgement due on 20.02.2018 itself after obtaining authorisation from the Deputy Commissioner (CT), Nalgonda. 17 Against the above show cause notices petitioner did not file any reply. Consequently, third respondent passed best judgment assessment orders on 02.07.2018 for the three years i.e. 2014-15, 2015-16 and 2016-17 confirming the turnovers and the tax liability proposed in the show cause notices dated 20.02.2018. Thus as per the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessment orders were sent to the business address of the petitioner by way of registered post with acknowledgement due. Therefore, under Rule 64 of the TVAT Rules, notices were validly sent and would be deemed to have been served on the petitioner. Since the petitioner did not come forward with material papers, the assessing authority had no other option but to make best judgment assessment. That apart, the assessment orders were not challenged and the consequential urgent payment notice dated 20.07.2019 was belatedly challenged in the year 2021. In these circumstances he contends that the assessments made have attained finality and should not be disturbed. 21 In his reply submissions, Mr. D.Srinivas, learned senior counsel for the petitioner submits that the question is not about receipt or non-receipt of pre-assessment notice or assessment orders. The question is, after accepting payment of tax under composition scheme, is it permissible for the assessing authority to resile from such position and make assessments levying tax at a much higher rate? This he submits is not permissible and if this is not permissible then the assessments made would be non-est in the eye of law....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ealer shall not be eligible for input tax credit and shall not be eligible to issue tax invoices; (f) In the case of a contractor mentioned in clause (a), if any part of the contract is awarded to a sub-contractor, the subcontractor shall be exempted from tax on the value of the subcontract. The sub-contractor shall not be eligible to claim input tax credit on the inputs used in the execution of such sub-contract; 25 Thus the above provision says that any VAT dealer who executes a contract and opts to pay tax by way of composition, must register himself as a VAT dealer and he shall pay tax at the rate of 5% of the total consideration received or receivable. In a case where the VAT dealer opts for composition he shall before commencing execution of the work notify the prescribed authority in Form VAT 250 details of the contract on which composition option has been exercised. On receipt of the payment by the VAT dealer, he shall calculate the tax at 5% of the amount received and shall enter such details in Form VAT 200 whereafter the tax due shall be paid along with the return in Form VAT 200. 26 In Koothattukulam Liquors v. Deputy Commissioner of Sales Taxes (2015) 12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice of a dealer to opt for compounded payment of tax and if the said choice is in accordance with the scheme and is accepted by the taxing authority, it becomes an agreed amount of tax. Thereafter, the department and dealer are bound by the said agreement. 28 Supreme Court further held as follows: 20. The compounding of the tax by way of contract of payment of tax is a lump sum on the value of contract on an agreed rate. The contract of compounding is a statutory contract under a scheme, in which the State Government can increase or decrease the rate of compounding of tax. It is an invitation to offer for compounding for each financial year resulting in an agreement qua such financial year. Therefore, the contract between the assessee and the assessing authority can be then annulled by the parties only under the circumstances which are provided under the provisions of the Contract Act. The right to rescind from the contract is available to the assessee only under the circumstances prevailing under the Contract Act. The term "rescind" as explained in the Contracts Act, 1872 is "revocation of contract by an express and unequivocal cancellation by one party". The right of ....