Madhya Pradesh High Court
M/S Gemini Fuels Pvt.Ltd. vs Asstt. Commissioner Judgement Given ... on 18 September, 2013
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W.P.No. 2590 of 2008(O)
M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T.
18.09.2013
Shri Mukesh Agrawal, Counsel for the petitioner.
Shri Piyush Dharmadhikari, G.A. for the respondents.
This order shall decide W.P. No. 2590 of 2008(O), W.P.No.2808 of 2008(O), W.P.No. 4799 of 2009(O), W.P.No.4807 of 2009(O), W.P.No.4810 of 2009(O) and W.P.No.4811 of 2009(O) as the identical question based on similar set of facts is involved in all the matters. For the convenience, facts are taken from W.P.2590 of 2008 [M/s Gemini Fuels Pvt. Ltd. vs. The Assistant Commissioner Commercial Tax, Katni].
Petitioner has sought following reliefs :-
1. To call for the records from the respondents pertaining to the impugned order and other proceedings including record and proceedings of task force in the case of the petitioner.
2. To hold that petitioner's industrial unit was engaged in manufacturing of coal briquettes,
3. To hold that exemptions cannot be denied on the erroneous findings of the Special Task Committee and the respondents.
4. To quash the assessment orders passed by the respondent No.1.
5. To quash the impugned revision order passed by the respondent No.2.
6. To direct the respondents to allow exemption to the petitioner as per eligibility certificate and annual the order of assessment framed by respondent No.1.
7. To hold that the constitution of task force was illegal and its report is not admissible as biased report devoid of available facts and evidences.
8. Any other relief which this Hon. Court deems fit may also be granted to the petitioner.
The case of the petitioner is that the petitioner is a
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 manufacturer of Coal briquettes by way and means of mechanized coke plant and is carrying on its business since 1995. The petitioner was duly registered under the provisions of M.P. Commercial Tax Act, 1995. The petitioner was granted certificate of registration by the District Industries Center after proper verification, site inspection and also by fulfilling various other requirements. Petitioner was granted exemption from payment of tax on the purchase of Coal since the petitioner was a new unit. Petitioner was granted exemption between 21.4.1994 and 20.4.2001. This exemption was granted to the petitioner under notification No. F.No.A-3-41-81(35) ST-V dated 23.10.1981 & Notification No. A-3-41-31(31)ST-V dated 29.6.1982. An inspection was carried out by the Special Task Force presided by the Assistant Commercial Tax Officer at the manufacturing Unit of the petitioner on 22.6.2000. As per the inspection note it was found that the petitioner was indulged in trading of coal i.e. purchasing the same from the coal companies and selling the same to various individual customers in the open market only, with a motive to purchase coal under the exemption certificate and was evading the tax. Thereafter, the petitioner's exemption was cancelled and proceedings were initiated against the petitioner. It is submitted by the petitioner that the controversy involved in this case is squarely covered by a Division Bench judgment of this Court in Shri Sharda Domestic Fuels Pvt. Ltd. vs. State of M.P.& others [(2013) 23 STJ 275(MP)] and similar directions may be issued in the present case.
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 The aforesaid contention is not opposed by Shri Dharmadhikari, learned Counsel appearing for the State. It is submitted by him that an enquiry has been directed in Sharda Domestic (supra) which may also be conducted in the case of the petitioner also and with the similar directions this matter may also be disposed of finally.
In Sharda Domestic Fuels (supra), a Division Bench of this Court considering the similar circumstances has decided the matter and for ready reference, we quote the order which reads thus :-
2. For the convenience facts are taken from WP No.15484/07 (M/s Shri Sharda Domestic Fuels Pvt. Ltd. vs. The State of M.P. and others). The petitioner, at the relevant period, was manufacturer of coke briquettes.
For manufacture of coke briquettes, at the relevant time, there was an exemption to the unit to purchase coal on concessional rates, use it in the manufacturing of coke briquettes and to sell it in the market. The petitioner was manufacturing coke briquettes so it was exempted and was not liable to pay commercial tax, entry tax, etc. on the purchase of coal and on the manufactured item, namely, coke briquettes. Petitioner was assessed for the assessment year 1997-98 and as per the initial assessment order, no tax was found imposed on the petitioner. It appears that a task force of the respondent/Department enquired a complaint and recorded a finding that petitioner and other petitioners were indulged in tax evasion activities, and, infact they were selling coal directly in the market without manufacture of coke briquettes. On the basis of report of task force, assessments of the petitioner/M/s Shri Sharda Domestic Fuels Pvt. Ltd., Katni and others were reopened for various years. On the basis of reopened assessment, Order (Annexure P/4) dated
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 28.12.02 was passed by which the petitioner was held liable for payment of tax Rs.5,22,750/- and penalty on the said amount.
(a) This Order (Annexure P/4) was subject-matter in revision before the Additional Commissioner, Commercial Tax, Jabalpur in Revision Case No. 262/R/2003/Prantiya and Revision Case No. 255/R/2003/Entry Tax. By a common order in almost all the cases dated 10.05.04, the Addl. Commissioner, Commercial Tax, Jabalpur remanded the matters to the Assessing Officer with certain directions as shown on page 6 and 7 of the order.
(b) The Revisional Authority had found that units of the petitioner were found to be closed on the basis of statement of Sarpanch , while as per inspection notes these units were functional, and on the basis of inspection report, statements of Sarpanch were found without any meaning. The petitioners also produced documentary evidence that they were using generator sets by hiring it and for this purpose, they produced contract agreement before the authority. On the basis of material produced before the Assessing Officer and the Revisional Authority, the Revisional Authority recorded a finding that no proper evidence was collected in respect of the sales for the year 1997-98. The report of the task force was non-speaking and without any supporting documentary evidence. After three years of the initial assessment order, if the unit is found closed in physical inspection, then on the basis of this, a finding cannot be recorded that before three years the unit was not functional. If the allegations are that the unit had not used the raw material in the manufacturing of coke briquettes and has sold it in the market for tax evasion, then for that purpose, the documentary evidence could have been collected and an opportunity ought to have been extended to the assessee for explanation, and thereafter a speaking order could have been passed by the Assessing Officer. The findings recorded by the Assessing Officer on the basis of report of task force was not on sound reasoning.
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013
(c) In respect of the allegations, the assessee was not extended an opportunity to explain and to prove evidence.During alleged period, Manager DIC, Labour Department, Deputy Collector, Sub-Divisional Officer had inspected the unit and had duly certified that the aforesaid unit was functional. All these documentary evidence were ignored by the Assessing Officer while passing the order. On the basis of aforesaid, the Revisional Authority had found that such reassessment orders cannot be affirmed. (d) The Revisional Authority also found that for the assessment year 1997-98, the inquiry officer and the tax assessing officer had not collected facts and evidence in respect of the tax evasion. A format was prepared and by the help of computer the assessment order was passed which was not a speaking order. In respect of the allegations against a trader, an opportunity ought to have been extended for explanation and for production of evidence, which was not extended. The explanation submitted by the assessee was not properly considered by the Assessing Officer and ex parte order was passed. On the aforesaid grounds, in the interest of justice, the Revisional Authority had remanded the matter with a direction to extend an opportunity to the assessee before reassessment and for verification of the sales by the Assessing Officer. The Revisional Authority had further found that it was also not verified how many purchasers were found bogus, and in this regard the explanation of the assessee was also not obtained. So far as report of CBI is concerned, it was not filed before the assessing officer and that could not have been the basis for re-assessment. The report of CBI could have been examined by the Assessing Officer and after due examination of the said report along with allegations and evidence, the matter could have been decided. With the aforesaid directions, the matter was remanded to the assessing officer.
3. Before the assessing officer, the assessee was noticed. It appears that on
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 21.02.05 as per Annexure R/2 to R/6 certain documentary evidence were produced before the assessing officer. The assessing officer, on the basis of aforesaid, directed the assessee (i) to produce evidence in respect of the full name, address and registration number of all the purchasers who had purchased coke briquettes; (ii) the documentary evidence in respect of transportation of goods, including bilty, challan, etc.; (iii) if the payment was made by cheque or draft, then particulars; (iv) any other evidence which the assessee wants to produce. The assessee had sought time to file reply in respect of following queries; (i) the report of task force dated 24.5.2000; (ii) the statement of local Sarpanch ;(iii) in respect of verification by the Department that most of the purchaser units were not found in existence; (iv) in respect of non-payment of sale price by cheque or draft. The Assessing Officer had also directed the assessee to file reply on the aforesaid points. It appears that case was listed on 14.03.05, 8.8.05, 30.9.05, 24.10.05 and was adjourned for filing of the reply. On 6.1.06, when none had appeared for the assessee, the matter was closed, and on 12.01.06, the Assessing Officer passed an order reiterating the earlier order and same tax and penalty was again imposed upon the petitioner.
4. Against the Order (Annexure P/8) dated 12.01.06, a revision was preferred by the petitioner, but vide Order (Annexure P/11) dated 19.07.06 the revision was dismissed. These orders are under challenge in this writ petition.
5. Learned counsel appearing for petitioners submit; (i) that remand order (Annexure P/5) was not followed by the Assessing Officer, and even at the second time the Revisional Authority while passing Order (P/11) has not considered the fact that earlier remand order (Annexure P/5) was not complied with; (ii) the burden was on the Department to prove that the report of task force was correct, but no opportunity was allowed to the petitioner for cross- examination of the concerned officer who had
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 submitted the report of task force; (iii) reliance is placed to the judgments of this Court in Metalflex Rubber Works, Indore vs. State of M.P. & Ors. 1995 Vol.14 Tax Law Decisions 126 and Sartaj Boot House vs. Deputy Commissioner of Sales Tax and others (1998) 31 Vikraya Kar Nirnaya 404.
6. Shri Vivek Agarwal, learned GA appearing for State supported the order. It was submitted by him that after the remand, due opportunity was extended to the assessee, but the assessee had failed to prove that infact there were genuine sales of the manufactured items, namely, coke briquettes. It was also submitted that once such an opportunity was allowed to the petitioner after remand, there was full compliance of remand order. Both the authorities have rightly decided the matter against the petitioner. He has referred certain order sheets of the Assessing Officer in respect of extending opportunity to the petitioner for filing reply and for production of material.
7. To appreciate the rival contentions of the parties, we have perused the remand order (Annexure P/5). In the remand order (Annexure P/5), certain specific directions were issued to the Assessing Officer. The Revisional Authority had issued following directions :-
"(i) That, for the assessment year 1997-98 no evidence was collected in respect of non- productionby the unit;
(ii) That, merely on the basis of report of task force which is non-speaking, it cannot be decided that the unit was closed before three years of the inspection;
(iii) That, the evidence could have been collected in respect of tax evasion by the unit and on this evidence, an opportunity ought to have been extended to the assessee to rebut the allegations, and thereafter to pass a speaking order;
(iv) That, during the period in which it is alleged that the unit remained closed, the premises were inspected by Manager DIC, Labour Department, Deputy Collector and Sub-Divisional Officer and they had duly certified that unit was functional. These
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 reports were ignored by the Assessing Officer;
(v) That, the Assessing Officer ought to have passed a reasoned order, while on earlier occasion, a format was prepared and by the help of computer and all the assessment orders were passed which were not speaking orders;
(vi) That, which transactions were found bogus, the Assessing Officer should specify and obtain an explanation from the assessee and thereafter to decide the matter;
(vii) That, the report of CBI was not available on record. The report of CBI could have been treated as a report only, but on the basis of such report, the assessment order could not have been passed."
8. From perusal of the order after the remand (Annexure P/8), it appears that the Assessing Officer on page 5 of the order recorded only one fact that no evidence was produced by the assessee inspite of allowing time to produce the record,and on the basis of this, the Assessing Officer had passed the assessment order reiterating the earlier assessment order. While as per the remand order, the Assessing Officer was required to frame a fresh assessment order after complying the remand order passed by the Revisional Authority, but it appears that mechanically assessment order was passed by the Assessing Officer. The Revisional Authority while deciding the matter by an Order dated 19.07.06 (Annexure P/11) has also not considered that in the earlier remand order (Annexure P/5) various directions were issued for framing a fresh assessment order after remand, which were not duly complied with by the Assessing Officer. It was the duty of the Assessing Officer to look into the remand order and to comply with the said remand order in letter and spirit. When remand order was very specific in respect of certain directions, then those points ought to have been considered by the Assessing Officer even without production of any material by the assessee. The Assessing Officer ought to have recorded a fresh finding that there was tax evasion by the petitioner, on the basis of
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 some material and documentary evidence tax evasion was found proved. But, in the Assessment Order and Revisional Order we do not find any such finding while it was necessary for the Assessing Officer and Revisional Authority to record such findings.
9. From the perusal of the impugned order, we find that after narration of the facts, the Revisional Authority because of non- production of any material before it by the petitioners reiterated the earlier order only, while as per directions issued by the Revisional Authority which are re-produced in para 7 hereinabove, the Assessing Authority was under an obligation to meet out all the aforesaid directions, but it appears that the Assessing Officer impressed with the fact that no evidence was produced before it by the assessee reiterated the earlier order,while it was under an obligation to decide the matter as directed by the Revisional Authority. When the important and vital issues are not considered by the Assessing Officer, the assessment order after remand cannot be sustained under the law. In aforesaid circumstances, matter deserves to be remanded back to the Assessing Officer to pass a fresh order in compliance of remand order (Annexure P/5). ( See Dharampal Satyapal Limited and another vs. State of Bihar and Others (2008) 7 SCC 19, para 6).
10. In aforesaid circumstances, we are left with no option except to remand the matter again to the Assessing Officer to comply with the remand order (Annexure P/5) dated 10.05.04, and to proceed further in accordance with law. Before reassessment, the Assessing Officer shall extend an opportunity to the petitioner to submit its explanation, and for this purpose, a time period of thirty days shall be allowed by the Assessing Officer to the petitioner, and thereafter the Assessing Officer shall be free to frame a fresh assessment order in accordance with law.
As the controversy involved in all the cases and the facts are also identical, we dispose of all the cases with similar
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W.P.No. 2590 of 2008(O)M/s Gemini Fuels Pvt. Ltd. The Asstt. Commissioner I.T. 18.09.2013 directions. This order shall be applicable in all the cases, as far as it is applicable.
With the aforesaid directions, all the petitions are disposed of finally with no order as to costs.
(Krishn Kumar Lahoti) (Subhash Kakade)
Acting Chief Justice Judge
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