Jharkhand High Court
Tata Steel Limited vs State Of Jharkhand & Ors on 6 March, 2012
Author: Aparesh Kumar Singh
Bench: R.R.Prasad, Aparesh Kumar Singh
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(T). No. 6661 of 2011
Tata Steel Limited ............... Petitioner
Versus
The State of Jharkhand & Others ......... Respondents
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CORAM: HON'BLE MR. JUSTICE R.R.PRASAD
HON'BLE MR. JUSTICE APARESH KUMAR SINGH
For the Petitioner : Mr. M.S.Mittal, Sr. Advocate, Mrs. A.R. Choudhary
For the Respondents : Mr. Ajit Kumar, A.A.G.
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Reserved on 27.1.2012 Pronounced on 06 . 03.2012
The petitioner, in the instant writ application, has sought quashing of the
entire proceedings initiated pursuant to notice dated 16.7.2011(annexure-6 series)
including the order dated 13.8.2011(annexure-9) passed by the Deputy Commissioner
of Commercial Taxes, Jharia Circle , Dhanbad. The petitioner is also aggrieved by the
subsequent demand notice no. 527 dated 13.8.2011(annexure-8) raised by the
Deputy Commissioner of Commercial Taxes, Jharia Circle, Dhanbad, pursuant to its
order dated 13.8.2011 where under an order of assessment under Jharkhand Value
Added Tax has been passed holding a liability of Rs. 19,99,496.68/- together with a
penalty of Rs.39,98,993.36 under section 37(6) of the Jharkhand Value Added Tax
Act,2005 (herein after referred to as " the act of 2005").
The facts in brief leading to the issuance of the aforesaid impugned order
dated 13.8.2011 and the demand notice of the same date are as follows:-
The petitioner- company is engaged in the manufacturing of Iron and Steel
products at its integrated steel plant at Jamshedpur in the State of Jharkhand. It has
its coal mines at Jamadoba and Bhelatand within the state of Jharkhand . The
petitioner is separately registered in Jharia Circle, Dhanbad for its activities in relation
to Jamadoba and Bhelatand colliery having registration no. 20671800791 under the
Act of 2005. The assessment proceeding under the Act of 2005 for the financial year
2007-08 was concluded by the Assessing Officer by passing an order contained in
annexure-3 by the Deputy Commissioner, Commercial Taxes, Jharia Circle, Dhanbad
dated 19.2.2010 under section 35 of the Act of 2005.
The petitioner, being aggrieved by the order of the Assessing authority,
preferred a suo-moto revision before the Commissioner of Commercial Taxes being
2
Revision Case No. CC(S)86 of 2010. By order dated 25.3.2010 the
Commissioner of Commercial Tax passed an interim order staying the recovery
of the disputed amount of Tax of the petitioner produced evidence of payment of
amount of Rs. 1 crore against the disputed amount to the Lower Court by
29.3.2010. The said revision case is still pending before the learned Commissioner, Commercial Taxes, Jharkhand Ranchi.
The petitioner, thereafter, received a notice dated 16.7.2011 asking it to appear on 30.7.2011 and furnish explanation in connection with the audit objection raised in relation to the financial year 2007-08. The audit objection was also annexed with the notification dated 16.7.2011, which is annexure-6 series to the writ petition. The petitioner appeared and submitted its reply in detail, which is also apparent from the averments made in the writ petition. The show cause reply is also annexed as annexure-7 to the writ petition. The petitioner appears to have furnished a detailed show cause reply to the notice dated 16.7.2011, referred to herein above. However, the Assessing authority has proceeded to issue the impugned order dated 13.8.2011 recording a finding that there is difference in the revised annual returns filed by the petitioner and the audit report JVAT 409 in relation to gross sales amount . The assessing officer has therefore, disbelieved the statement of the petitioner and proceeded to pass the impugned order in view of the audit objection. Accordingly, a sum of Rs.19.99.496.68 as VAT @ 4% has been assessed and at the same time a penalty under section 37(6) of the Act of 2005 amounting to Rs. 39,98,993.36 has been imposed. The aforesaid total sum under the two heads comes to Rs. 59,98,490.04 and a demand notice dated 13.8.2011, which is also impugned herein, was issued pursuant thereto as well.
The petitioner has assailed the impugned order, interalia, on the grounds that the impugned order has been issued under the provisions of section 40 of the Act of 2005, which deals with the turnover escaping assessment, whereas no proceeding in accordance with the provisions of the said Act read with Rule 59(1) of the Jharkhand Value Added Tax Rules, 2006 in the prescribed form JVAT 302 was issued to the petitioner. The petitioner has 3 also assailed the further penalty issued under the impugned order, as no notice under section 37(6) of the Act of 2005 had been issued giving opportunity of hearing to the petitioner.
The respondents have appeared and filed their counter affidavit, inter-alia, supporting the impugned order and the notice of demand contesting the claim made on the part of the petitioner. The respondents have also stated that reasonable and sufficient opportunity was accorded to the petitioner by service of notice under memo no. 365 dated 16.7.2011 along with which audit objection was also annexed.
The petitioner appeared and filed a detailed reply, which was not found convincing by the respondent no. 4 and accordingly, the impugned order was issued. The respondents have further justified the imposition of penalty under the provisions of section 37(6) on the ground that on a fair reading of the audit objection and cross verification of the original assessment order, original annual returns filed, subsequent revised returns filed and the VAT added report with the figures of stock transferred, the same were neither depicted in its returns nor covered by the statutory form JVAT 506 at the time of original assessment or at a later stage, when it was show caused by the respondent no.4. The assessing officer had no other option, in view of discrepancy pointed out in audit objection and in absence of any convincing justification or explanation by the petitioner dealer, but to act in accordance with the express provisions of the act and the rules framed under the Act of 2005 while imposing the tax and the penalty.
The respondents have also asserted that alternative statutory remedy is available to the petitioner and earlier also the petitioner has availed of the said remedy by revision before the Commissioner of commercial taxes. The petitioner should not straight way come to this Court without exhausting its alternative remedy. The respondents have relied upon a number of judgments stated in para-13 of their counter affidavit passed by the Hon'ble Supreme Court of India and also the latest judgment of Hon'ble Supreme Court reported in (2010) 8 SCC 110.
4
On perusal of the show cause dated 16.07.2011 issued by the respondent no. 4, it appears that the same has been issued to the petitioner asking it to furnish its explanation in relation to the audit objection for the assessment year 2007-08 alongwith necessary documents and papers. The said audit objection is also annexed to the said notice ( Annexure-6 series). The petitioner admittedly appeared before the respondent no. 4 in response to the said notice and filed a detailed show cause (Annexure-7) to meet the contents of the audit objection raised.
At this stage it would be relevant to notice few provisions of the Act of 2005 relating to assessment of the value added tax. Section 35 deals with self assessment. Section 36 relates to provisional assessment, whereas Section 37 relates to audit assessment. The relevant provisions of Section 37 are quoted herein below.
37. Audit Assessment. (1) Where
(a) a registered dealer has failed to furnish any return under sub-Section (1) of 29 in respect of any period' or
(b) a registered dealer is selected for audit assessment by the prescribed authority on the basis of any criteria or on random basis; or
(c) the prescribed authority is not satisfied with the correctness of any return filed under Section 29; or bona fides of any claim of exemption, deduction, concession, input tax credit or genuineness of any declaration, evidence furnished by a registered dealer in support thereof; or
(d) the prescribed authority has reasons to believe that detailed scrutiny of the case is necessary;
The prescribed authority may, notwithstanding the fact that the dealer may have already been assessed under Section 35 or 36, serve on such dealer, in the prescribed manner, a notice requiring him to appear on a date and place specified therein, which may be business premises or at a place specified in the notice, to either attend and produce or cause to be produced the books of account and all evidence on which the dealer relies in support of his returns including tax invoice, if any, or to produce such evidence as specified in the notice.
(2) The dealer shall provide full cooperation and assistance to the prescribed authority, to conduct the proceedings under this Section at his business premises.
(3) If proceeding under this Section are to be conducted at the business premises of the dealer, giving him a notice to be present on prescribed date and time at his business premises and it is found that the dealer or his authorized4 representative is not available or not functioning from such premises, the prescribed 5 authority shall proceed to assess to the best of judgment the amount of tax due from him.
(4) If the prescribed authority is prevented from conducting the proceedings under this Section, he may impose, a sum equal to the amount of tax so assessed, by way of penalty.
(5) The prescribed authority shall, after considering all the evidence produced in course of proceedings or collected by him and is satisfied that;
the dealer-
(a) has not furnished returns in respect of any period(s) by the prescribed date; or
(b) has furnished incomplete and incorrect returns for any period; or
(c) has failed to comply with any notice under sub- Section (1) or Sub-Section (3); or
(d) has failed to maintain accounts in accordance with the provisions of this Act or has not regularly employed any method of accounting; the prescribed authority shall assess to the best of his judgement, the amount of tax due from such dealer.
(6) If the prescribed authority is satisfied that the dealer, in order to evade or avoid payment of tax-;
(a) has failed to furnish without reasonable cause, returns in respect of any period by the prescribed date; or
(b) has furnished incomplete and incorrect returns for any period; or
(c) has availed Input Tax Credit to which he is not entitled to or
(d) has employed such method of accounting which does not enable the prescribed authority to assess the tax due from him;
he shall, after giving the dealer reasonable opportunity of being heard, direct that the dealer shall pay, by way of penalty; a sum equal to twice the amount of additional tax assessed on account of the said reasons under this Section.
On perusal of the aforesaid provisions, it appears that the prescribed authority may notwithstanding the fact that the dealer has already been assessed the amount of tax under Section 35 or 36, serve on such dealer a notice in the prescribed manner asking it to present with the relevant books of account and other evidences to explain its stand on the ground on which the exercise for audit assessment is being made under the conditions enumerated in the provisions of Section 37(1)(a),(b),(c),(d). The assessing Officer after consideration of the reply and the evidence produced in course of proceeding or collected by him and on being satisfied that:-
"(a) a registered dealer has failed to furnish any return under sub-Section (1) of 29 in respect of any period' or
(b) a registered dealer is selected for audit assessment by the prescribed authority on the basis of any 6 criteria or on random basis; or
(c) the prescribed authority is not satisfied with the correctness of any return filed under Section 29; or bona fides of any claim of exemption, deduction, concession, input tax credit or genuineness of any declaration, evidence furnished by a registered dealer in support thereof; or
(d) the prescribed authority has reasons to believe that detailed scrutiny of the case is necessary;"
shall assess to the best of his judgment, the amount of tax due from such dealer.
Section 37(6) provides that if the prescribed authority is satisfied that the dealer in order to evade or avoid the payment of tax has failed on anyone of the grounds stated under the aforesaid sub-Section 6, after giving reasonable opportunity of being heard direct the dealer to pay, by way of penalty, a sum equal to twice the amount of additional tax assessed on account of the said reasons under this Section.
On perusal of Section 40, on the other hand, it appears that it relates to turnover escaping assessment. The relevant portion of Section 40(1) is quoted herein below:-
"40. Turnover escaping Assessment.-(1) Where after a dealer is assessed under Section 35 or Section 36 for any year or part thereof, and the Prescribed Authority, upon information or otherwise has reason to believe that the whole or any part of the turnover of the dealer in respect of any period has -
(a) escaped assessment; or
(b) been under assessed; or
(c) been assessed at a rate lower than the rate on which it is assessable
(d) been wrongly allowed any deduction therefrom; or
(e) been wrongly allowed any credit therein;
the prescribed authority may, serve or cause to serve a notice on the dealer and after giving the dealer reasonable opportunity of being heard and making such inquiries as he considers necessary, proceed to assess to the best of his judgment, the amount of tax due from the dealer in respect of such turnover, and the provisions of this Act shall so far as may be, apply accordingly;
[Provided, for clause (a), where the prescribed authority has reasons to believe that the dealer has concealed, omitted or failed to disclose willfully, the particulars of such turnover or has furnished incorrect particulars of his such turnover and thereby return figures are below the real amount, the prescribed authority shall proceed to assess or reassess the amount of tax due from the dealer in respect of such 7 turnover and the provisions of this Act, shall so far as may apply accordingly and for this purpose, the provisions of sub-Section (6) of Section 37 shall apply accordingly."
Although, the petitioner has drawn our attention to Section 59 of the Jharkhand Value Added Tax Rules, 2006 relating to notice of hearing under different Sections but the relevant form JVAT 302 annexed to the writ petition does not include thereunder the contemplated notice under Section 37(6) as has been submitted on the part of the petitioner. The petitioner has relied upon the judgements reported in the case of Usha Sales(Pvt.) Ltd. Vs. State of Bihar reported in 1985 Sales Tax Cases Vol-58 Page-217 and in the case of Bihar Plastic Industries Limited Vs. State of Bihar and Others reported in 2000 Sales Tax Cases Vol-117 Page-346 in relation to the question relating to issuance of proper notice.
The Judgment of Usha Sales (Pvt.) Ltd. (supra) has also been referred to in the subsequent case Bihar Plastic Industries Limited (supra). The matter related to escaped assessment in the case of Usha Sales (Pvt) Ltd., whereas in the instant case, petitioner was served with copy of the audit objection alongwith notice dated 16.07.2011 asking it to appear explaining its stand with necessary documents and books of account unlike in the case of Bihar Plastic Industries Limited, wherein a copy of the audit objection report was not annexed to the notice. In any case the petitioner had understood the scope of the notice and what it was required to explain. The petitioner had thereafter furnished a detailed show-cause reply to meet each and every objections raised in the audit objections.
In the circumstances, the assessing officer, being dissatisfied with the explanation furnished by the petitioner, has proceeded to issue the impugned order and demand notice. The petitioner in this writ petition has assailed the order of assessment as also the penalty imposed under Section 37(6) of the Act, 2005. The aforesaid assessment in the impugned order appears to have been made on the basis of an audit objection in exercise of power conferred under Section 37 of the Act of 2005 dealing with audit assessment. The assessing officer has also recorded its findings in the impugned order that the 8 revised annual returns filed by the petitioner substantially differed with the audit report JVAT-409 in relation to the Gross Sale Proceed.
On the basis of that audit objection, the assessing authority has proceeded to pass the order of assessment of tax @ 4% VAT totaling Rs. 19,99,496.68. This Court, in exercise of its writ jurisdiction, is not required to enter into the merit of the decision dealing with the quantum of assessment or the findings arrived by the assessing authority. The petitioner has a statutory remedy of appeal and/or revision before the prescribed authority, where the correctness of the assessment order can be assailed alongwith all other issues.
The petitioner, however, has also raised that the assessing officer has imposed penalty over twice the amount of the assessment without complying with the requirement of notice under Section 37(6) of the Act of 2005. Although, it appears that there is some substance in the aforesaid submission of the petitioner, since the imposition of tax and original assessment can only be adjudicated upon in appeal or revision by the prescribed authority, this Court cannot go into the correctness or otherwise of the said assessment order. It is, therefore, proper that the petitioner may raise all such points of law and fact in relation to the imposition of penalty as well before the same prescribed authority under the statutory remedy available to him. Since the original assessment order can be adjudicated upon by the statutory authority, the petitioner is at liberty to raise all such points of law and facts also in relation to the imposition of penalty purportedly raised under Section 37(6) of the Act of 2005 including the requirement of notice as contemplated thereunder.
The Hon'ble Supreme Court of India has time and again held that if an efficacious alternative statutory remedy is available to the aggrieved person, the High Court ordinarily will not entertain a petition under Article 226 of the Constitution of India. This rule applies with greater rigour in the matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In the case of United Bank of India Vrs. Satyavati Tondon and others , reported in (2010) 8 SCC 110, while 9 dealing with the rule of exhaustion of alternative remedy, the Hon'ble Supreme Court, after consideration of a number of decisions laid down by the Supreme Court earlier, clearly held that in matters involving revenue where statutory remedies are available, the High Court must insist that before availing the remedy under Article 226 of the Constitution of India, a person must exhaust the remedy available under the relevant statute. The petitioner has an efficacious alternative statutory remedy in the form of appeal or revision before the prescribed authority . Therefore, in view of the reasons and observations made herein above the petitioner may avail the alternative statutory remedy to assail the impugned order of assessment and penalty as well as the consequent notice of demand before the prescribed authority, where it can raise all such issues of law as well as fact, available to it.
This court, therefore, does not consider it proper to exercise its discretionary jurisdiction at this stage and the writ petition is accordingly, dismissed.
(Aparesh Kumar Singh, J.) (R.R.Prasad, J.) Pandey/-