Gujarat High Court
M/S Samay Sales, Through Proprietor ... vs State Of Gujarat on 16 July, 2018
Author: M.R. Shah
Bench: M.R. Shah, A.Y. Kogje
C/SCA/6686/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6686 of 2018
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M/S SAMAY SALES, THROUGH PROPRIETOR RAJENDRA JETHABHAI
KESHWANI
Versus
STATE OF GUJARAT
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Appearance:
MR SN SOPARKAR, SENIOR ADVOCATE WITH MR HIREN J TRIVEDI(8808) for the
PETITIONER(s)
MR PRANAV TRIVEDI, ASSISTANT GOVERNMENT PLEADER for RESPONDENT(s)
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 16/07/2018
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE M.R. SHAH)
1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate Writ, direction or order to quash and set aside the impugned orders dated 29.03.2018 (Annexure-N) by which in exercise of powers under Section 34(8A)(a) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "the VAT Act") the Assistant Commissioner of Sales Tax, Unit-I, Ahmedabad, has raised the demand of value added tax.
2. Over and above other number of issues, Shri S.N.Soparkar, learned Senior Counsel appearing on behalf of Page 1 of 9 C/SCA/6686/2018 ORDER the petitioner, relying upon the decision of the Division Bench of this Court in the case of H.Tribhovandas And Sons v. State of Gujarat dated 26.04.2018 in Special Civil Application No.3002/2018 and other allied Special Civil Applications, has vehemently submitted that as held by the Division Bench of this Court, the impugned order passed under Section 34(8A) of the VAT Act shall be barred by limitation. It is submitted by learned Senior Counsel appearing on behalf of the petitioner that in the aforesaid decision, the Division Bench of this Court has observed that time-limit prescribed under Section 35 of the VAT Act shall also be applicable with respect to the proceedings under Section 34(8A) also.
3. However, considering Section 34(8A) and Section 35 of the VAT Act and the powers to be exercised under section 34(8A) and Section 35 of the VAT Act, for the reasons stated hereinbelow, with respect, we are not in agreement with the view taken that the period of limitation prescribed under Section 35 of the VAT Act shall be applicable also with respect to the proceedings under Section 34(8A) of the VAT Act.
4. Sections 34(8A) and Section 35 of the VAT Act read as under:
Page 2 of 9 C/SCA/6686/2018 ORDER
34. Audit Assessment.
... ... ...
(8A)(a) During the course of any proceedings
under This Act, if the prescribed authority is satisfied that the tax has been evaded or sought to be evaded or the tax liability has not been disclosed correctly or excess tax credit has been claimed by any dealer in respect of any period or periods by not recording or recording in an in correct manner, any transaction of sale or purchase, or that any claim has been incorrectly made, then in such a case notwithstanding any notice for assessment has been issued under the provisions of this section or any other section of this Act the prescribed authority may, after giving such dealer a reasonable opportunity of being heard, initiate assessment of the dealer in respect of such transaction or claim:
Provided that where such proceedings are under section 73 of section 75, the prescribed authority shall transfer the proceedings relating to such transaction or claim directing the concerned assessing authority to assess the dealer in respect of such transaction or claim:
Provided further that the prescribed authority shall, notwithstanding anything contained in section 17, be deemed to have the requisite jurisdiction and power to assess such dealer in respect of such transaction of sale or purchase or claim, covered by Page 3 of 9 C/SCA/6686/2018 ORDER clause (a) and such assessment proceedings shall, for all purposes of this Act, be deemed to have been transferred to such authority...."
(b) The assessment proceedings under this sub-
section shall be without prejudice to the assessment proceedings in respect of the said period or periods under any other provisions of this Act by any authority who otherwise has the jurisdiction to assess such dealer in respect of other transactions of sale or purchase or any other claim.
(c) The assessment under this sub-section shall be made separately in respect of the transaction or claim relating to the said period or periods to the best of the judgment of the prescribed authority where necessary and irrespective of any assessment made under this subsection, the dealer may be assessed separately under the other provisions of this section in respect of the said period or periods:
Provided that, once the dealer is assessed under this subsection, no tax from such transaction or claim and penalty and interest, if any, shall be levied or demanded from such dealer, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such transaction or claim.
Explanation - For the purpose of this sub-section, Page 4 of 9 C/SCA/6686/2018 ORDER "prescribed authority", "the said authority", "such authority" and "any authority" shall mean, the Commissioner or, as the case may be, the authorities appointed under section 16 and other officers or persons to whom the Commissioner has delegated his power in this behalf."
... ... ...
"35. Turnover escaping assessment.
(1) Where after a dealer has been assessed under
section 32, 33, 34 for any year or part thereof, the Commissioner has reason to believe that the whole or any part of the taxable turnover of the dealer in respect of any period has, -
(a) escaped assessment, or
(b) been under - assessed, or
(c) been assessed at the rate lower than the rate
at which it is assessable, or
(d) wrongly been allowed any deduction
therefrom; or
(e) wrongly been allowed any credit therein,
the Commissioner may serve a notice on the dealer and after giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover which comes to his notice subsequently, and the provisions of this Act shall, so far as may be, apply accordingly Page 5 of 9 C/SCA/6686/2018 ORDER (2) No order shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable."
5. On considering the aforesaid provisions, we are of the opinion that both operate in a different situation and in different circumstances and both the powers are independent and operate in different field. Section 34(8A) of the VAT Act shall be applicable in a case where during the course of any proceedings under the VAT Act, the prescribed authority is satisfied that the tax has been evaded or sought to be evaded or the tax liability has not been disclosed correctly or excess tax credit has been claimed by any dealer in respect of any period or periods by not recording or recording in an incorrect manner, any transaction of sale or purchase or that any claim has been incorrectly made, then in such a case, notwithstanding any notice for assessment has been issued under other provisions of Section 34 or any other Section of the VAT Act. Section 35 of the VAT Act confers power upon the Commissioner to suo motu take into revision, the order of assessment in case a dealer who has been assessed under Sections 32, 33, 34, and when the Commissioner has reason Page 6 of 9 C/SCA/6686/2018 ORDER to believe that the whole or any part of the taxable 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 at which it is assessable, or (d) wrongly been allowed any deduction therefrom, or (e) wrongly been allowed any credit therein.
6. Therefore, the powers under Section 34(8A) and Section 35 of the VAT Act shall operate under different fields and under different circumstances. Section 34(8A) shall be applicable in a case where there is an evasion of tax liability by a dealer and/or the circumstance mentioned in Section 34(8A) of the Act which as such can be relatable to evasion of duty. The same is not so when the powers under Section 35 are to be exercised. It prima-facie appears that the limitation prescribed under Section 35 of the VAT Act shall not be applicable to the proceedings under section 34(8A) of the VAT Act as both are independent proceedings operating in different fact situation. We are prima-facie of the opinion that applying the limitation prescribed under Section 35 to the proceedings under Section 34(8A) would be re-writing Section 34(8A) and to provide the limitation which is not there in the said Section. Page 7 of 9 C/SCA/6686/2018 ORDER
7. Considering the object and purpose of enactment of Section 34(8A) of the VAT Act, when the legislature has not specifically provided any period of limitation while exercising powers under Section 34(8A) of the VAT Act, the reasons for not providing such period of limitation are required to be considered. Probably, one of the reasons can be that when a dealer has evaded the duty liability by not disclosing the correct facts, he cannot be permitted to take such benefit and the powers can be exercised whenever it has come to the notice of the prescribed authority during the course of any proceedings under the VAT Act. Therefore, with respect, we do not agree with the view taken by the Division Bench in the the case of H.Tribhovandas And Sons v. State of Gujarat (supra) that the period of limitation prescribed under Section 35 of th VAT Act shall also be applicable in respect to the proceedings under Section 34(8A) of the VAT Act. Under the circumstances, the matter is required to be referred to the Full Bench to consider the following questions:
"(1) Whether the period of limitation prescribed under Section 35 of the VAT Act can be made applicable with respect to the proceedings under Section 34(8A) of the VAT Act?
(2) Assuming that the period of limitation prescribed under Section 35 of the VAT Act shall be Page 8 of 9 C/SCA/6686/2018 ORDER made applicable to the proceedings under Section 34(8A) of the VAT Act, in that case, whether the period of limitation would start from the date of knowledge of such evasion during the course of any proceedings under the VAT Act and/or from the date of the original assessment order?"
Registry to place the matter before Hon'ble the Chief Justice for constituting Full Bench to consider the aforesaid questions.
(M.R. SHAH, J) (A.Y. KOGJE, J) sunil Page 9 of 9