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Andhra Pradesh High Court
Judges : BILAL NAZKI, L.NARSIMHA REDDY, S.ANANDA REDDY
Abmica Lamp House, Rajahmundry - Appellant
Versus
Commercial Tax Officer (Int)-I enforcement, Hyderabad - Respondent
Decided On : 01-27-05
Held : The Vigilance Officers of the department have got the power to enter the premises of the dealer to inspect not only the books of accounts maintained by the dealer, but also the verification of the stocks etc. The said inspecting authorities may also have the power to record statements from the dealers, but thereafter there is no provision to make a demand for payment of the tax/penalty or compounding fee on the spot. The Vigilance Officers, if they have got the power of assessment, can make the assessments after complying the procedure provided under the provisions of the Act; or otherwise those authorities can forward the statements recorded from the dealer to the concerned assessing authority, who can make assessment either provisional or final or even revise the assessment basing on the material in accordance with law. Until and unless an assessment is made, no liability can be fastened on the dealer and equally the department is not entitled to collect any amount on the premise that the dealer has come forward accepting the alleged suppressed turnover or other irregularities and the same cannot be the basis for collection of tax, without preceding the same by an assessment order or any other order, fixing the liability of the dealer. If such a procedure is followed by the officers, either assessing or the vigilance, the complaint of the dealers that statements were obtained by force and coercion could be avoided, as in such cases, the dealers can have a right to dispute the statements already recorded and satisfy the concerned assessing authority about his claim of noniability to the tax, as proposed by the officers of the department.
THE Division Bench of this Court though noticed that a suit or other proceedings are not maintainable either to set aside, modify or question the validity of any assessment order or other proceedings under the Act, but, however expressed that a suit is maintainable to question the collection of tax, which is allegedly done under undue influence and coercion and under the threat of arrest and imprisonment. The Division Bench also felt that there is no machinery provided under the Act to question the nature of the order, which is said to have been passed and the tax collected under undue influence and coercion as well as threat of arrest and imprisonment. In the absence of any specific machinery, the Court felt that the provisions of Section 36 may not come in the way to institute a suit in a Civil Court. But, we are unable to agree with the said view expressed by the learned Judges of this Court. When the legislature enacted a provision prohibiting any of the parties to the proceedings under the Act to approach any other forum than what is provided under the provisions of the act, it is not for this Court to hold that still a suit could be maintained, if an order or proceeding is alleged to have been passed under certain circumstances, as referred to earlier. In fact, if the assessing authorities provided enough time as provided under the act and the Rules, the dispute could be resolved before the assessing authority himself, if not, before the other hierarchical authorities provided under the statute. Those authorities are competent to consider the factual aspects. Therefore, the same would avoid driving the parties to any other fora for seeking relief. In our opinion the provisions of Section 36 were incorporated to avoid unnecessary and lengthy litigation. If once the dealers are permitted to go out of the said bar to institute proceedings on some pretext or the other, the very intention of the Legislature would be frustrated. Further, it is not for the Courts to show any other forum for adjudication, which is not provided in the statute. Hence, we disapprove.
In the result, the writ petitions are allowed setting aside the impugned orders wherever no assessments are made for the disputed turnover, and consequently the amounts collected under the impugned order are ordered to be refunded or adjusted if there are any existing outstanding demands. In cases where assessments are made, the collected tax shall be subject to the outcome of the statutory appeals, if any. Similarly, if the compounding fee levied and collected is equal to the tax without any assessments, in such cases, the compounding orders are also set aside and the fee collected is to be refunded to the dealers or adjusted if there are any existing outstanding demands.
( 1 ) : These writ petitions are filed by the dealers registered under the provisions of the Andhra Pradesh general Sales Tax Act, 1957 carrying on various businesses, assailing the action of the Vigilance Wing of the Sales Tax department, and praying for the issue of writ of mandamus declaring such action of collecting the tax as well as the compounding fee, without framing necessary assessments determining the tax liability or passing orders, coercing the dealers for compounding the alleged offence and collecting the compounding fee on the day of inspection either through payment of cash or through post dated cheques, as illegal, and contrary to the provisions of law as well as the judgments rendered by this Court, and consequently sought for a direction to the respondents to refund the amounts collected from the dealers with interest.
( 2 ) ACCORDING to the learned Counsel for the petitioners the modus operendi adopted by the department, especially by the Intelligence Wing is that they will inspect the business premises of the dealer and on the alleged irregularities found in the course of inspection they used to obtain statements from the persons, who are available at the business premises at the time of inspection by force or coercion threatening to seize the stock or close down the business and thereupon collect the tax for the alleged suppression of the sales turnover and also demand for compounding the alleged offence on the very same day and creates the record as if a show cause notice was issued and a reply was given on the same date and also passing an order accepting the offence for compounding the offence by levying the compounding fee, which is almost equivalent to the alleged tax found due on the suppressed turnover. The department officials also collect the cash if available on the spot or if it is not available they will collect postdated cheques, and thereafter there will not be any further proceedings either for assessment or otherwise. It is contended on behalf of the counsel appearing for the petitioners that this action of the department was deprecated by this Court in number of writ petitions, and in spite of it, the department did not mend its ways and has been repeating the same by forcing the dealers only to give statements, accepting the alleged irregularities or suppressed turnover and collecting the tax on the alleged suppressed turnover as well as compounding fee as if the dealer had conceded and offered for compounding. The entire exercise will be completed within a day or two at the most the said procedure that is being adopted by the officials of the department is even contrary to the provisions of the Act and the Rules made thereunder. Therefore, the learned Counsel sought for the issue of appropriate writ declaring the said action as illegal and unsustainable.
( 3 ) COUNTERS have been filed on behalf of the respondents in some of the writ petitions supporting their action. The stand of the department is that whenever the vigilance Cell/enforcement Wing gets some credible information with reference to the illegal activities indulged by the dealers for evasion of the tax, the officials of the department with proper authorization from the concerned authority inspects the entire premises, records as well as the stocks during the business hours, and wherever there is improper maintenance of the accounts or the stock was not properly recorded showing the suppressed turnover with reference to the said turnover tax was sought to be recovered, and when penal action was proposed, the dealers have come forward seeking compounding the offence in order to avoid further penal action. Therefore, the department was accepting the request of the dealers and collecting the tax as well as compounding fee in respect of the suppressed turnover. It is also the stand of the department that the department never coerced the dealers to give statements accepting the suppressed turnover or unaccounted
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