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2020 Supreme(Guj) 549
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sonia Gokani, N.V. Anjaria, JJ.
M/s. B.K. Traders through its Proprietor Viralbhai Vinodbhai Karia - Petitioner
Versus
State of Gujarat - Respondent
R/Special Civil Application No. 7944 of 2020
Decided On : 03-07-2020
For the Petitioner: Sr.Adv. Mr. Manish Bhatt with Ld.Adv. Mr. Apurva N. Mehta, Vijay H. Patel.
For the Respondent: Mr. Trupesh Kathiriya.
Point of Law:
A dealer is also required to prove and establish the actual movement of goods and is required to prove the genuineness of the transaction and then and then only, the ITC can be allowed.
Headnote:
Taxation – Constitution of India, 1950 – Article 226 – Gujarat Value Added Tax Act, 2003– Sections 34 (2)(b) and 35(1) – Assessment and Re Assessment – Notice – challenging the legality and the validity of the assessment order, passed in Form No. 304, as well as the Notice issued in the Form No. 305, by the respondent No.2, under Section 35 of Act, 2003 – Challenge is made essentially and predominantly on the grounds that, without assigning any reason or availing any opportunity and in complete breach of the principles of natural justice, the impugned order came to be passed by the respondent No.2 – Petitioner is the sole proprietary concern, having its office at the address mentioned in the cause-title. It is engaged in the business of trading edible oil – It is averred by the petitioner that, though, it has furnished periodical as well as annual self-assessment reports, as required under Sections 29 to 33 of the VAT Act and the petitioner was not selected for audit assessment, as provided under Sections 34 (2)(b) of the VAT Act, and therefore, it is deemed that the self-assessment reports submitted by the petitioner have been accepted – However, a notice came to be issued to the petitioner on for re-assessment under Section 35(1) of the VAT Act by the respondent No.2. It is though lamented that no reason is given in notice issued under Section 35(1) of the VAT Act for re-assessment – A detailed reply was furnished by the petitioner on 13.03.2020, where, the Petitioner has sought various details as well as those documents on the basis of which the case of the petitioner is selected for re-assessment so that the Petitioner on the merits can aptly defend its case – Held, petitioner also had produced the bills, with regard to the goods purchased by it from M/s. Lucky Enterprise and the petitioner had claimed certain amount of total ITC on the purchase, allegedly made to have been from M/s. Lucky Enterprise. The Assessing Officer passed the assessment order, allowing ITC claim made by the petitioner in respect of the goods purchased from M/s. Lucky Enterprise. However, later on, the registration of the M/s. Lucky Enterprise came to be cancelled ab initio from 22.02.2006 on the ground that M/s. Lucky Enterprises is not a genuine dealer and had indulged into billing activities only, and therefore, all the transactions made by M/s. Lucky Enterprises were found to be bogus and non-genuine – Thereafter, the order passed by the Assessing Officer, allowing ITC claimed by the petitioner – Dealer of Rs.6,49,561/-, came to be taken under suo motu revision by the first Revisional Authority, i.e. Deputy Commissioner of Commercial Tax, Audit-1, Ahmedabad. Then, the petitioner dealer was served with the show-cause notice and was also called upon to show reason, as to why ITC claimed by the petitioner-assessee on the purchases alleged to have been made from M/s Lucky Enterprises may not be denied or cancelled – Impugned order quashed and set aside and the matter is remanded to the competent authority for its consideration afresh, on merits, the case of the petitioner of ITC, after availing due opportunity to the petitioner – Directions issued – Petition partly allowed.(Paras 6 and 7)
Facts of the case:
Petitioner is the sole proprietary concern, having its office at the address mentioned in the cause-title. It is engaged in the business of trading edible oil – It is averred by the petitioner that, though, it has furnished periodical as well as annual self-assessment reports, as required under Sections 29 to 33 of the VAT Act and the petitioner was not selected for audit assessment, as provided under Sections 34 (2)(b) of the VAT Act, and therefore, it is deemed that the self-assessment reports submitted by the petitioner have been accepted – However, a notice came to be issued to the petitioner on for re-assessment under Section 35(1) of the VAT Act by the respondent No.2. It is though lamented that no reason is given in notice issued under Section 35(1) of the VAT Act for re-assessment – A detailed reply was furnished by the petitioner on 13.03.2020, where, the Petitioner has sought various details as well as those documents on the basis of which the case of the petitioner is selected for re-assessment so that the Petitioner on the merits can aptly defend its case.
Findings of the court:
Petitioner also had produced the bills, with regard to the goods purchased by it from M/s. Lucky Enterprise and the petitioner had claimed certain amount of total ITC on the purchase, allegedly made to have been from M/s. Lucky Enterprise. The Assessing Officer passed the assessment order, allowing ITC claim made by the petitioner in respect of the goods purchased from M/s. Lucky Enterprise. However, later on, the registration of the M/s. Lucky Enterprise came to be cancelled ab initio from 22.02.2006 on the ground that M/s. Lucky Enterprises is not a genuine dealer and had indulged into billing activities only, and therefore, all the transactions made by M/s. Lucky Enterprises were found to be bogus and non-genuine – Thereafter, the order passed by the Assessing Officer, allowing ITC claimed by the petitioner – Dealer of Rs.6,49,561/-, came to be taken under suo motu revision by the first Revisional Authority, i.e. Deputy Commissioner of Commercial Tax, Audit-1, Ahmedabad. Then, the petitioner dealer was served with the show-cause notice and was also called upon to show reason, as to why ITC claimed by the petitioner-assessee on the purchases alleged to have been made from M/s Lucky Enterprises may not be denied or cancelled – Impugned order is QUASHED and set aside and the matter is REMANDED to the competent authority for its consideration afresh, on merits, the case of the petitioner of ITC, after availing due opportunity to the petitioner.
Result: Petition partly allowed
ORDER :
SONIA GOKANI, J.
Rule. Learned AGP waives service of rule for the respondents.
1. This is a petition, preferred under Article 226 of the Constitution of India, challenging the legality and the validity of the assessment order dated 24.03.2020, passed in Form No. 304, as well as the Notice dated 24.03.2020, issued in the Form No. 305, by the respondent No.2, under Section 35 of the Gujarat Value Added Tax Act, 2003 (‘VAT Act’, herein after).
1.1 The challenge is made essentially and predominantly on the grounds that, without assigning any reason or availing any opportunity and in complete breach of the principles of natural justice, the impugned order came to be passed by the respondent No.2.
2. The petitioner is the sole proprietary concern, having its office at the address mentioned in the cause-title. It is engaged in the business of trading edible oil.
2.1 It is averred by the petitioner that, though, it has furnished periodical as well as annual self-assessment reports, as required under Sections 29 to 33 of the VAT Act and the petitioner was not selected for audit assessment, as provided under Sections 34 (2)(b) of the VAT Act, and therefore, it is deemed that the self-assessment reports submitted by the petitioner have been accepted.
2.2 However, a notice came to be issued to the petitioner on 23.12.2019 for re-assessment under Section 35(1) of the VAT Act by the respondent No.2. It is though lamented that no reason is given in the notice issued under Section 35(1) of the VAT Act for re-assessment.
2.3 A detailed reply was furnished by the petitioner on 13.03.2020, where, the Petitioner has sought various details as well as those documents on the basis of which the case of the petitioner is selected for re-assessment so that the Petitioner on the merits can aptly defend its case.
2.4 The grievance on the part of the petitioner is that respondent No.2, ignored the communication dated 13.03.2020 and proceeded to pass the impugned order on dated 24th March, 2020, a day prior to the imposition of lockdown in the entire Country and thereby raising dues to the tune of Rs.1,27,45,512/-, inclusive of the interest and penalty. The basis, for levying of the tax so also the penalty with interest, is the cancellation of registration of a vendor, with whom the petitioner had transacted during the years 2014 and 2015. It is averred by the petitioner that such cancellation of registration of the vendor concerned, i.e. M/s. Maa Oil Mills, Gondal, is done on 30.07.2019. M/s. Maa Oil Mills had the registration number 240942971. It is, therefore, urged by the petitioner that neither the copy of the cancellation of the registration of M/s. Maa Oil Mills nor any other materials nor any opportunity has been given to the petitioner to cross-examine a responsible employee or office bearer of the M/s. Maa Oil Mills and that is a complete failure on the part of respondent No.2 to follow the principles of natural justice and the order came to be passed, denying the ‘Input Tax Credit’ (in short, ‘ITC’) to the petitioner.
3. We have heard the learned Sr. Advocate, Mr. Manish Bhatt, appearing for the petitioner with learned Advocates, Mr. Vijay Patel and Mr. Mehta, for the petitioner.
3.1 Learned Sr. Advocate, Mr. Bhatt, has argued before this Court that the law is well-settled, as to when the Court can exercise the jurisdiction under Article 226 of the Constitution of India, even when the alternative efficacious remedy is available. He, further, has urged that this is a one classic case, where, in complete violation of the principles of natural justice and in utter disregard of the law, well settled by this Court in various decisions, respondent No.2 has acted and has imposed heavy liability of tax along with interest and penalty.
3.2 He, further, urged that, at no point of time, fraud is pleaded and all the transactions with M/s. Maa Oil Mills is through banking channels only. It is urged that there are transport receipts also on record, and therefore,
