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THE HON’BLE SRI JUSTICE A.V.SESHA SAI AND
THE HON’BLE SRI JUSTICE M.GANGA RAO
CIVIL MISCELLANEOUS APPEAL Nos.38, 39, 40, 41, 42,
43, 44, 45, 46, 47, 48, 49, 50 and 51 of 2019
COMMON JUDGMENT: (Per Hon’ble Sri Justice A.V.Sesha Sai)
Heard Sri A.V.A.Siva Karithikeya, learned counsel for the appellant, in all these appeals, and the learned Government Pleader for Commercial Taxes (A.P.), appearing for the respondents, apart from perusing the entire material available on record.
Since all these appeals, filed under Section 9-E of the Andhra Pradesh Entertainments Tax Act, 1939 (for brevity, ‘the Act’) r/w Rule 44 of the Andhra Pradesh Entertainments Rules, 1939 (for brevity, ‘the Rules’), share similar grievance, and as the contentions are also the same, this Court deems it appropriate to dispose of all these appeals by way of this common judgment.
These appeals are directed against the orders, dated 26.12.2018 and 28.12.2018, passed by the Entertainments Tax Joint Commissioner, Vijayawada-first respondent herein. By way of the orders impugned, first respondent herein confirmed the proposals made in the pre-revision show cause notices and overruled the objections raised by the appellant- assessee-MCO.
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Appellant is a Master Cable Operator (MCO), which provides network connections and it enters into area-wise agreements with the Local Cable Operators (LCOs), who, in turn, issue cable connections directly to the end consumers within their respective areas by collecting monthly charges. The area of operation of the appellant is in and around Eluru Municipal Corporation and adjacent Panchayats. Irrespective of the number of connections provided by the Local Cable Operators (LCOs), appellant gets fixed the rental charges. Initially vide notice, dated 01.12.2006, the second respondent-Entertainment Tax Officer-II, Eluru Circle directed the appellant to file the details of cable operators and number of connections under the appellant in Eluru Municipal Corporation. On 19.12.2006, appellant submitted a reply, giving details of all the cable operators including the total number of connections in Eluru Municipal Corporation area as 10,046. On the basis of the survey, said to have been conducted by the Town Planning Officer, Eluru Municipal Corporation in divisions 1 to 50, the Commissioner, Eluru Municipal Corporation, vide proceedings in Roc.No.G1/ 420/2007, dated 22.07.2007, while sending the survey lists, requested the Commercial Tax Officer, West Godavari District, Eluru to levy entertainment tax on 30,701 connections and to send the amount payable to the Eluru Municipal Corporation, by way of grant. Thereafter, the second respondent, vide notice, dated 02.08.2007, directed the appellant to pay the
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tax on 30701 connections. On 08.08.2007 appellant submitted a reply objecting to the survey. Vide notice, dated 29.05.2008, second respondent herein stated that the Eluru Municipal Corporation conducted another door-to-door survey and gave their report on 22.05.2008, indicating the number of connections in Eluru Municipal Corporation as 28,157 and issued directions to the appellant to pay the same.
According to the appellant, it filed reply, objecting to the said survey also, while stating that the Eluru Municipal Corporation’s report included all the connections in the area and included the connections which do not belong to the appellant. On 09.07.2010 second respondent herein issued a show cause notice, proposing to assess on 30,901 connections. On 05.08.2010 appellant filed a reply, objecting to the reliance placed by the second respondent on the survey report submitted by the Eluru Municipal Corporation. Second respondent herein confirmed the proposals made in the show cause notice and completed the assessment on 29.03.2011. Aggrieved thereby, appellant herein preferred appeal before the Appellate Deputy Commissioner (CT), Vijayawada, who, vide order, dated 02.12.2011, remanded the appeal to the Assessing Officer with a direction to rectify the assessments accordingly and the operative portion of the said order reads as follows:
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“After going through the correspondence between the EMC and the Commercial Taxes Department, I am convinced that the survey conducted by the EMC was not appellants specific. On the other hand, it was only to ascertain the total number of connections existing in Eluru urban area. Since the Assessing Officer did not bring any material on record to dispute the contentions of the appellants that there were other MCOs also operating alongside the appellants parallely in EMC during the relevant period and even till date, I hold that it is not correct on the part of the assessing officer to include all those 30701 connections in the appellants’ hands only. If so desired, the Assessing Officer ought to have independently ascertained the number of connections MCO wise and then proceeded to identify the unreported connections for the purpose of assessments in the respective MCOs hands, instead of all in on hand i.e. the appellants.
With these observations the assessing officer is directed to rectify the disputed assessments duly reducing the extra connections from the appellants’ assessments and to delete the extra demands for the respective quarters covered in these appeals.
The appeals are accordingly disposed of with the above directions to the Assessing Officer for reducing the additional demands in the appellants’ assessments”.
According to the learned counsel for the appellant, the said order attained finality. The second respondent, thereafter, vide order, dated 05.11.2014, completed the assessment, confirming the original demands basing on the EMC report, ignoring the directions of the appellate authority
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in its order, dated 02.12.2011. Aggrieved thereby, appellant filed the present appeals before the first appellate authority i.e. the Appellate Deputy Commissioner (CT), Vijayawada, who vide order, dated 05.01.2015, remanded the matter to the second respondent and operative portion of the said order reads as under:
“The above evidences prove beyond doubt that G-9 Eluru Communications Net Work existed ever since 2006 till the date of their sale to the appellant during June, 2010.
Similarly, the evidences pertaining to Vennela Cable Net Work, Eluru also prove that they were simultaneously operating since July, 2009.
Finally the fact remained that the A.O. failed to address the specific directions of the ADC (CT) with regard to his own independent survey to identify any unreported additional connections in the appellant’s hands without recourse to the EMC survey report, but simply refuted the evidence filed by the appellant on trivial grounds. I therefore hold that the action of the A.O. in including all the connections in the appellant’s hands basing on the same EMC report alone is not acceptable as it was not appellant specific. Further, the A.O. also did not bring any material on record to support that the same was appellant specific, even in the consequential assessment proceedings. Also the documents produced by the appellant prove beyond doubt the existence of the other two MCOs also during the relevant period and the A.O. has no valid reasons to dispute the appellant’s claim in this regard.
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In view of the above the stated facts and circumstances, the matter is remanded back to the assessing authority i.e. Entertainments Tax Officer-II, Eluru who is having territorial jurisdiction over the appellant to verify the contentions of the appellant afresh with regard to the presence of two other MCOs during the relevant period and delete the additional demand raised based on the EMC Survey Report in the appellant’s hand and also to accept the number of connections originally filed by the appellant for the relevant period. With these directions, the impugned order is set aside on the disputed tax and the appeal thereon remanded”.
While the things being so, the Entertainments Joint Commissioner-first respondent herein issued a pre-revision show cause notice, dated 18.08.2016, proposing to revise the order of the first appellate authority, dated 05.01.2015. It is not in dispute that the appellant herein, on 13.09.2016, submitted objections for the said course of action sought to be adopted by the first respondent herein. Thereafter, first respondent herein passed the orders under challenge on 26.12.2018 and 28.12.2018. These appeals challenge the said orders.
In the above background, challenging the validity and legal sustainability of the said orders, passed by the first respondent herein, the present appeals have been filed.
According to the learned counsel for the appellant, the orders impugned in the present appeals are highly erroneous,
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contrary to law, weight of evidence and probabilities of the case. It is further argued by the learned counsel that the first respondent grossly erred in revising the well-considered order passed by the appellate authority, dated 05.01.2015, and that the first respondent erred in relying on survey report of the Commissioner, Eluru Municipal Corporation, dated 22.07.2007, in which it is specifically stated that the total number of cable connections in the Corporation limits was estimated to be 30,701. It is further submitted by the learned counsel that the first respondent, having noticed from the record that there were other MCOs also operating within the jurisdiction of the Corporation, ought to have held that the appellant was not liable to pay the tax on those extra connections. It is also the submission of the learned counsel that, earlier order of remand, dated 02.12.2011, attained finality.
On the other hand, it is strenuously contended by the learned Government Pleader that there is absolutely no illegality nor there exists any procedural infirmity in the impugned action and, in the absence of the same, invocation of the jurisdiction of this Court is impermissible. It is further submitted by the learned Government Pleader that, only after elaborately and meticulously considering each and every aspect, first respondent herein passed the impugned order.
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In the above background, now the issue that emerges for consideration of this Court is: “whether the orders passed by the first respondent, which are impugned in the present appeals, are sustainable and tenable and whether the same warrant any interference of this Court?.
There is absolutely no controversy with regard to the reality that, earlier when the appellant herein preferred statutory appeal before the Appellate Deputy Commissioner against the order, dated 29.03.2011, the Appellate Deputy Commissioner, Vijayawada, vide order, dated 02.12.2011, remanded the matter to the Assessing Officer with a direction to rectify the assessments. While remanding the matter, the Appellate Deputy Commissioner made certain observations and the said observations, to the extent of relevance to the present appeals, read as under:
“During July, 2007, the Municipal Commissioner got a survey conducted at the instance of the Standing Committee Executive Authority in order to ascertain the actual number of cable connections in EMC and conveyed the same to the CTO, Eluru, vide ROC No.G1/420/2007, dated 22.07.2007, with a request to enhance the corresponding grant from the commercial taxes department to the EMC. Their team of bill collectors conducted a survey basing on the number of electric poles, telephone poles, cable poles and trees existing in all the 50 divisions of the EMC. According to
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the said report the total number of connections in all in the 50 divisions of EMC were estimated to be 30701.
The sum and substance of the whole of the correspondence between the Municipal Corporation, Commercial Tax Department and the appellants, reveals that the intention behind the survey conducted by the EMC was to ascertain the actual number of urban connections in EMC and compare the actual collections of the entertainment tax from all the cable operators, in order to protect their share of grant from the Commercial Taxes Department. Accordingly, the survey report covered the total number of connections as existing during the period of survey. For the purpose, the basis chosen was the number of electric police, telephone poles, cable poles and the trees, which were counted to be 5213 in all and basing on those poles etc., the survey team gave the total number of connections at 30701. However, the appellants have disputed the basis of survey and also contended that it was not a door to door survey and further that it was not MCO and cable operators wise. Therefore they contended that all those 30701 connections cannot be treated as belonging to them only.
In this regard, as per the correspondence, it is evident that the survey related to the total number of connections in EMC only but not with particular reference to the number of connections belonging to the appellants. Keeping aside the technical accuracy or
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otherwise of the survey report, it has to be agreed that, under no stretch of imagination it can be held that all those connections belonged to the appellants only, particularly when the Assessing Officer did not bring on record anything otherwise to the appellants contention that there were other MCOs also operating in EMC during relevant point of time. Also the Assessing Officer did not bring out any defects in the appellants books and records. As could be seen from the appellants books and their Income tax returns as produced before me it is clear that they did not contain individual consumer wise collections fully, but only their individual direct connections and the hire charges from the respective LCOs as per their agreements were recorded. As such those returns cannot be expected to be the corroborating evidence, failure of which can be a ground for completing the assessment to the best of his judgment by the Assessing Officer”.
Eventually, the Appellate Deputy Commissioner remanded the matter as observed supra, with the following direction:
“After going through the correspondence between the EMC and the Commercial Taxes Department, I am convinced that the survey conducted by the EMC was not appellants specific. On the other hand, it was only to ascertain the total number of connections existing in Eluru urban area. Since the Assessing
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Officer did not bring any material on record to dispute the contentions of the appellants that there were other MCOs also operating along side the appellants, parallel in EMC during the relevant period and even till date, I hold that it is not correct on the part of the assessing officer to include all those 30701 connections in the appellants’ hands only. If so desired, the Assessing Officer ought to have independently ascertained the number of connections MCO wise and then proceeded to identify the unreported connections for the purpose of assessments in the respective MCOs hands, instead of all in on hand, i.e. the appellants.
With these observations, the assessing officer is directed to rectify the disputed assessments duly reducing the extra connections from the appellants’ assessments and to delete the extra demands for the respective quarters covered in these appeals.
The appeals are accordingly disposed of with the above directions to the Assessing Officer for reducing the additional demands in the appellants’ assessments”.
It is the further submission of the learned counsel for the appellant that, though the appellant brought to the notice of the first respondent with regard to the order, dated 02.11.2011, which attained finality, the first respondent did not consider the said aspect in proper perspective. It is also the specific contention of the learned counsel that, though
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specific objections were taken by the appellant, the said objections were not answered by the first respondent in the impugned orders.
A perusal of the material available on record reveals that, though the appellant herein categorically brought to the notice of the first respondent all these aspects, including the existence of the MCOs and though the appellant herein filed certain documents, in support thereof, without assigning any reasons, muchless valid reasons, first respondent herein passed the impugned orders. In order to have a quietus to this litigation, this Court deems it appropriate to dispose of these appeals with a direction to the second respondent to undertake necessary exercise and to pass appropriate orders, strictly in accordance with law.
Accordingly, these Civil Miscellaneous Appeals are disposed of. There shall be no order as to costs.
As a sequel thereto, miscellaneous petitions, pending, if any, shall stand closed. __________________ A.V.SESHA SAI, J
__________________ M.GANGA RAO, J 12th November, 2019 Tsy