IN THE HIGH COURT OF JUDICATURE AT PATNA

Miscellaneous Appeal No.482 of 2011

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M/S Shah Traders, Shyam Nandan

.... .... Appellant

Versus

The State Of Bihar through the Chief Secretary, Bihar, Patna

.... .... Respondent

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with

Miscellaneous Appeal No.483 of 2011

======================================================

M/S Shah Traders, Shyam Nandan

.... .... Appellant

Versus

The State Of Bihar through the Chief Secretary, Bihar, Patna

.... .... Respondent

======================================================

Appearance :

For the Appellant/s : Mr. Suryadeo Prasad Tiwari, Adv.

For the Respondent/s : Mr. Piyush Lal, A.C. to AAG-I

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CORAM: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH

and

HONOURABLE MR. JUSTICE VIKASH JAIN

ORAL ORDER

(Per: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH)

3.

1-05-2012

Both these appeals have been heard together because

they relates to the same assessee for the period 1996-97 and

the Commercial Taxes Tribunal, Bihar, Patna has passed a

common order dated 8.12.2010 giving rise to two separate

appeals. M.A. No. 483 of 2011 arises out of order imposing

penalty under Section 20 (1)(a) of the Bihar Finance Act

(hereinafter referred to as the ‘Act’) whereas the other appeal

arises out of assessment proceeding under Section 17 (3) of the

Act.

2. On behalf of the appellant a substantial question of

law has been raised that the penalty proceeding is vitiated in

Patna High Court MA No.482 of 2011 (3) dt.01-05-2012

2

law on account of failure of concerned authority to issue proper

notice as required by Rule 19 (1) of the Bihar Sales Tax Rules,

1983 (hereinafter referred to as the ‘Rules’). According to

learned counsel for the appellant Section 20 (1) (a) of the Act

creates an obligation upon the concerned authority to give the

concerned dealer an opportunity of being heard in the manner

prescribed, i.e. as per Rule 19 (1) by issuing and serving a

notice which shall contain a gist of the accusations besides the

date and time of hearing.

3. For assailing the assessment order as well as the

appellate order and revisional order of the Tribunal in M.A. No.

482/2011 which relates to assessment under Section 17 (3) of

the Act, a question of law has been formulated to the effect that

since the assessing authority has placed full reliance on the

order imposing penalty for enhancing the gross turn over of the

appellant, if the order imposing penalty is vitiated in law, the

assessment order also needs to be set aside to the extent it is

based upon order of penalty.

4. For appreciating the question of law noticed above

the relevant facts may be noticed in brief. The appellant is a

registered dealer and deals in iron rods and cement. A team of

officers of Investigation Bureau of Commercial Tax Department,

Tirhut Division, Muzaffarpur inspected the business premises

of the appellant on 3^rd March, 1997 leading to seizure of some

books of accounts under Section 33 (3) of the Act. Thereafter a

Patna High Court MA No.482 of 2011 (3) dt.01-05-2012

3

notice under Section 33 (1) of the Act was also issued for

producing books of accounts. After service of notices on several

occasions when the appellant did not appear, an inspection

report with findings on the basis of seized books was prepared

and sent to the Muzaffarpur Circle for further action. On

receipt of the inspection report with findings, the learned

C.T.O, Muzaffarpur Circle issued notice for hearing under

Section 20 (1) (a) to the appellant and after hearing imposed a

penalty of Rs. 42, 514.00 said to be equal to the amount of

concealed tax.

5. Against the penalty order date