Punjab-Haryana High Court
M/S Brahm Sarup & Sons vs The Deputy Excise & Taxation ... on 17 May, 2010
Bench: Ashutosh Mohunta, Mehinder Singh Sullar
VAT Revision No.1 of 2009 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Date of Decision:-May 17,2010
M/s Brahm Sarup & Sons, Filling Station, Sector 28, Chandigarh ...Petitioner
Versus
The Deputy Excise & Taxation Commissioner -cum- Revisional Authority, UT
Chandigarh and others
...Respondents
CORAM: HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA
HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR
Present:- Mr.D.S.Brar, Advocate for the petitioner-new firm.
Mr.Rajesh Garg, Standing Counsel for respondent Nos.1 and 2.
Mr.Amit Jhanji, Advocate for respondent No.4.
Mehinder Singh Sullar, J.
The conspectus of the facts in epitome, relevant for disposal of the present revision petition and emanating from the record, is that M/s Brahm Sarup and Sons Filling Station (hereinafter to be referred as "the old firm") was granted registration certificate (for short "the RC") under the Punjab General Sales Tax Act, 1948 (for brevity "the PGST Act") and Central Sales Tax Act, 1956 (hereinafter to be referred as "the CST Act") on 24.4.1962, when it was a proprietorship concern of Brahm Sarup. The constitution of the firm was changed from proprietorship to partnership firm and Rakesh Mahindra and Abhey Kumar, sons of Brahm Sarup, were included as partners in it.
2. Thereafter, Rakesh Mahindra and his wife Smt.Kiran Mahindra applied for the grant of new RC as partners of another petitioner-firm by the same name of M/s Brahm Sarup and Sons (hereinafter to be referred as "the new firm"). This firm was again allotted RC on 24.11.2004 by the Assessing Authority, UT Chandigarh under the PGST and CST Acts. In the wake of repealing of PGST Act and enforcement of Punjab Value Added Tax Act, 2005 (hereinafter to be referred as "the VAT Act"), both the firms with the same name and nomenclature were VAT Revision No.1 of 2009 2 allotted separate TIN numbers operating in the same premises.
3. As soon as, Abhey Kumar, partner of the old firm, came to know about the existence of new firm with new RC, he filed a complaint, inter-alia, pleading that the department has wrongly granted the RC to the new firm. The matter was processed and on examining the record, it revealed that the order dated 24.11.2004 of the Assessing Authority granting the RC to the new firm suffers from illegality as the two RCs for the same name, place and business could not be granted. Therefore, the Revisional Authority issued a detailed notice, vide memo No.474 dated 7.9.2007 to the partners of the new firm under section 65 of the VAT Act, for affording an opportunity of hearing in this regard.
4. In pursuance of the show cause notice, Shri Ram Lal Luthra, Advocate appeared on behalf of the new firm and sought various adjournments, but ultimately, on 22.10.2007, he was confronted with the concealment of material facts at the time of registration of new firm. The learned counsel could not offer any plausible explanation, with regard to the concealment of material facts. That being so, the Revisional Authority set aside the order dated 24.11.2004 granting the RC to the new firm and cancelled the new RC, under the PGST and CST Acts, vide order dated 22.10.2007 (Annexure P3).
5. In the wake of appeal filed by the partners of the new firm, the Value Added Tax Tribunal remanded the matter back to the Deputy Excise & Taxation Commissioner -cum- Revisional Authority to enquire into, as to under which circumstances, two RCs were issued for the same business premises for the same trade to the same firm, vide order dated 9.7.2008 (Annexure P4).
6. After the remand, the Revisional Authority again concluded and reiterated that the order of the Assessing Authority for the grant of fresh RC suffers from illegality and impropriety and, therefore, cancelled the same in exercise of the powers conferred under section 65 of the VAT Act, vide order dated 8.4.2009 (Annexure P5).
VAT Revision No.1 of 2009 3
7. Again aggrieved by the order (Annexure P5), the new firm filed a revision petition, which was dismissed by the VAT Tribunal, vide impugned order dated 27.5.2009 (Annexure P7).
8. The new firm still did not feel satisfied with the impugned order (Annexure P7) and filed the present revision petition, inter-alia, raising many questions alien to the real controversy between the parties and purely based on facts. However, after going through the record, we are of the considered opinion that the following two main questions do arise for adjudication by this Court:-
"1.Whether in exercise of revisional jurisdiction, the Revisional Authority was competent to cancel the RC of the new firm or not?
2. Whether on the facts and in the circumstances of the case, there was sufficient material for canceling the RC of the new firm by the Revisional Authority and that the Tribunal was right in upholding the order of the Revisional Authority?"
9. Assailing the impugned order (Annexure P7), at the very outset, the learned counsel for the petitioner-new firm has contended with some amount of vehemence that the Revisional Authority was not competent to cancel the RC in exercise of its powers under section 65 of the VAT Act. The argument further proceeds that even there was no cogent material before the authorities for cancellation of RC of the new firm. Thus, he prayed for acceptance of the present revision petition. In support of his contention, the learned counsel for the petitioner has placed reliance on the judgments of the Hon'ble Apex Court in cases The Indian Aluminium Cables Ltd. and another v. Excise and Taxation Officer and another [1977] 89 STC 19, Madan Lal Arora v. Excise and Taxation Orfficer, Amritsar AIR 1961 Supreme Court 1565, this Court in cases Banarsi Dass Talwar v. The Deputy Excise and Taxation Commissioner, Jullundur Division, Jullundur [1983] 53 STC 150, The Excise and Taxation Officer, Assessing Authority, Ludhiana v. Hardit Singh Bhagat Singh [1986] 63 STC 152 and the VAT Revision No.1 of 2009 4 Gauhati High Court in case Rajindra Singh v. Superintendent of Taxes and others [1990] 79 STC 10.
10. Hailing the impugned order, on the contrary, the learned counsel for the respondents, State and old firm, have urged that since the partners of the new firm were guilty of concealment of material facts, so, the Revisional Authority has rightly cancelled its new RC in exercise of revisional jurisdiction and no interference is warranted in this connection.
11. The bare perusal of the record would reveal that originally, the old firm was a proprietorship concern when the registration was granted to it in the year 1962. The constitution of the firm was changed from proprietorship to partnership firm and Rakesh Mahindra and Abhey Kumar, sons of Brahm Sarup, were included as partners. Thereafter, Rakesh Mahindra and his wife Kiran Mahindra, partners of the (new) firm, formed a new firm with the same name and applied for and were granted new RC on 24.11.2004 by the Assessing Authority. Admittedly, the old firm was operating its business in the same premises when the new firm by the same name and nomenclature obtained new RC. Hence, the facts of this case are neither intricate nor much disputed.
12. Above being the position on record, now the short and significant questions arise for determination, are whether the Revisional Authority was competent to cancel the RC and there was cogent material in this relevant direction or not?
13. Having regard to the rival contentions of the learned counsel for the parties, we are of the considered opinion that there is no merit in this revision petition.
14. However, the main celebrated argument of the learned counsel for the new firm that the Revisional Authority did not have the jurisdiction to cancel the RC of new firm on the complaint of Abhey Kumar, partner of the old firm, is neither tenable nor the observations in Madan Lal Arora, Banarsi Dass Talwar and VAT Revision No.1 of 2009 5 Rajindra Singh's cases (supra) are at all applicable and foreign to the present controversy.
15. In Banarsi Dass Talwar's case (supra), this Court concluded that "the jurisdiction vested in the revising authority is confined only to the material which was before the Assessing Authority on the basis of which the original order was passed by the Assessing Authority. If subsequently fresh material has been collected or information has been received, that material or information cannot be taken into consideration for exercising powers under section 21(1) of the Punjab General Sales Tax Act, 1948. In such a case, the appropriate remedy is for initiating proceedings under section 11-A of the Act".
16. Sequelly, in Madan Lal Arora's case (supra), it was ruled by the Hon'ble Supreme Court that "the power to make assessment to the best of his judgment can, however, be exercised only within the three years mentioned therein and not after these three years had gone by."
17. Likewise, in Rajendra Singh's case (supra), the Gauhati High Court has observed that "the consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interest of the revenue, must be based on materials available on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion; the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting roving enquiries in matters or orders which are already concluded and when exercise of statutory power is dependent upon the existence of certain objective facts, the authority, before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court, it would be open to the court to examine whether the relevant objective factors are available from the records called for and were examined by such authority." VAT Revision No.1 of 2009 6
18. Possibly, no one can dispute about the aforesaid observations, but the same are alien and would not come to the rescue of the new firm in this relevant connection. In the case in hand, the Assessing Authority has cancelled the RC of the new firm on the basis of concealment of material facts, while exercising its revisional jurisdiction under section 65 of the VAT Act, which postulates that "the Commissioner or designated officer may, at his own motion, call for the record of any proceedings, which are pending before or have been disposed of by any authority subordinate to him for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think fit".
19. The matter did not rest there. Even the Commissioner has the power to cancel any such certificate issued under PGST Act as contemplated under section 7 (4) of this Act, which posits that "the Commissioner may from time to time, by order, amend or cancel any certificate of registration, inter-alia, on information furnished under section 16, or the information received that the dealer has violated any provision of this Act or the rules made thereunder or any other sufficient cause including mis-use of the certificate or cessation of liability to payment of tax under this Act".
20. Meaning thereby, not only that, the Commissioner has the statutory power to call for the record of any proceedings, which are pending or have been disposed of by any authority subordinate to him for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think fit, he has the additional power to cancel such RC under section 7(4) of the PGST Act as well. The only legal requirement as envisaged under these provisions is that "no order shall be passed, which adversely affects any person unless such person has been given an opportunity of being heard."
21. In the instant case, it is not a matter of dispute that the Revisional VAT Revision No.1 of 2009 7 Authority had issued notice to the new firm, gave full opportunity of hearing and then passed a detailed order, followed by reasons, and cancelled its RC. Therefore, a combined reading of these provisions would reveal that the Revisional Authority-cum- Commissioner was competent to and rightly cancelled the RC of the new firm in this relevant behalf.
22. Now adverting to the second contention of the learned counsel that there was no material to cancel the RC of new firm but the Revisional Authority has wrongly cancelled the same by a belated and illegal order, this argument is not only devoid of merit but misplaced as well. Sequelly, the Hon'ble Apex Court in The Indian Aluminium Cables Ltd. and another's case (supra) held that "under the Punjab General Sales Tax Act, 1948, mere statutory liability of a dealer to file the return or to pay the tax has not the effect of commencement of any proceeding under the Act. If the dealer has filed the return, the proceeding under the Act can be said to commence and the assessment under section 11(1) can be made at any time. The legislature did not fix any period of limitation for taking up of the steps or the passing of the assessment order under section 11". It was also observed that "although for the issuance of a notice under section 11(2), no time-limit has been fixed, the Assessing Authority must remain on its guard of taking the steps and completing the assessment as soon as it may be possible to do, because, if the dealer fails to comply with that notice, the Assessing Authority may be obliged to take recourse to sub-section (4) attracting the bar of limitation of 5 years for proceeding to assess on the best judgment basis." Be that as it may, even this judgment and the judgment of this Court in Hardit Singh Bhagat Singh's case (supra), which are not nearer to the facts of the present case, will not advance the case of the petitioner in any manner as well.
23. As is evident from the record, the new firm applied and obtained RC under section 7 of the PGST Act, which envisages that "no dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has VAT Revision No.1 of 2009 8 been registered and possesses a registration certificate. Every dealer required, by sub-section (1) to be, registered shall make application in this behalf in the prescribed manner to the prescribed authority and if the said authority is satisfied that an application for registration is in order, he shall, in accordance with such rules and on payment of such fees as may be prescribed, register the applicant and grant him a certificate of registration in the prescribed form which may specify the class or classes of goods for the purposes of sub-clause (ii) of clause (a) of sub- section (2) of section 5."
24. As per rule 3-A of the PGST Rules, the application for registration under sections 7 or 8 of the PGST Act shall be made to the appropriate Assessing Authority in Form ST-1, containing 25 columns, requiring the applicant to furnish information, inter-alia, with regard to nature of business, manufacture of goods or trade, particulars of the proprietor/partners and all other persons having any interest in the business. The proprietor or any partner or any other person having an interest in the business, has interest in no other business anywhere in India or has interest in the other businesses in India. The business in respect of which the application is made, has been registered with the Registrar of Firms and Societies, Punjab or registered in any other State/Union Territory etc.
25. Again, it is not a matter of dispute in the present case that the partners of the new firm did not supply the complete particulars and are guilty of concealment of material facts. The Revisional Authority has recorded a finding of fact that (i) the statutory application form is incomplete with regard to disclosure of the information regarding interest of the proprietor/partner in any other business as per column No.4 of the application; (ii) that Rakesh Mahindra, partner of the new firm, had concealed the facts of his having interest in another existing old firm operating under the same name and style of M/s Brahm Sarup and sons; (iii) that while obtaining the RC for the new firm, the partner camouflaged the information with an intention to hide the tax liability of the old firm amounting to VAT Revision No.1 of 2009 9 Rs.1.85 crore approximately, which was operating in the same premises since 1952; and (iv) Abhey Kumar was also a partner of the old firm of the same name, which was already in existence and running its business at the same site since 1952 under the old RC. Had these informations been correctly mentioned in Form S.T.1 and had not been concealed by the new firm and the same would have come to the notice of the Assessing Authority. In that eventuality, issuance of wrong new RC to the new firm could have been avoided.
26. Thus, it would be seen that it stands proved on the record that the new firm has obtained the RC by mis-representation, concealing the facts and guilty of concealment of material facts. Therefore, we are of the considered opinion that there was more than sufficient material and the Revisional Authority has correctly cancelled the new RC of the new firm on the ground of suppression of material facts as discussed here-in-above. The Tribunal has rightly dismissed its appeal. No other illegality in the impugned order has been pointed out by the learned counsel for the new firm.
27. No other point, worth consideration, has been urged or pressed by the learned counsel for the parties.
28. In the light of the aforesaid reasons, it is held that the Revisional Authority was competent to and there was sufficient evidence of concealment of material facts for cancelling the RC of the new firm in exercise of its revisional jurisdiction under sections 65 of the VAT Act and 7(4) of the PGST Act and the Tribunal was right in upholding the order of the Revisional Authority. Thus, the questions of law raised in this petition are answered against the new firm and in favour of the revenue.
29. For the reasons recorded above, as there is no merit, therefore, the present revision petition is dismissed with no order as to costs.
30. Before parting with this judgment and taking into consideration the business interest of the parties, we are of the view that it would be expedient to VAT Revision No.1 of 2009 10 enable the new firm to apply for fresh RC after removing the defects. Therefore, liberty is granted to the new firm to apply for obtaining fresh RC after completion of all the statutory formalities. If it (new firm) moves any such application, then the Assessing Authority would decide the same on merits, after hearing all the concerned parties in accordance with law, within a period of two months positively.
(Mehinder Singh Sullar) Judge (Ashutosh Mohunta) Judge May 17,2010 AS Whether to be referred to reporter? Yes/No