1994 (12) TMI 304 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the order under Section 23-D of the Rajasthan Sales Tax Act, 1954.
2. Compliance with principles of natural justice.
3. Validity of the purchase and penalty provisions under Section 23-D.
4. Opportunity for the petitioner to be heard and provided with relevant documents.

Detailed Analysis:

1. Legality of the order under Section 23-D of the Rajasthan Sales Tax Act, 1954:
The petitioner challenged the order by the Deputy Commissioner (Administration) of the Commercial Taxes Department dated September 26, 1994, which directed the purchase of goods consigned to the petitioner under Section 23-D of the Rajasthan Sales Tax Act, 1954, read with Rule 63-B of the Rajasthan Sales Tax Rules, 1955. The petitioner contended that the goods were undervalued in the bill and that the order to purchase the goods was based on an allegation of underbilling without proper inquiry.

2. Compliance with principles of natural justice:
The petitioner argued that he was not given an opportunity to be heard during the preliminary inquiry, nor was he provided with the copy of the proposal or report by the Assistant Commercial Taxes Officer. The court emphasized that the principles of natural justice require that an opportunity should be given to the dealer before authorizing an officer to purchase the goods. The court cited the case of C.B. Gautam v. Union of India [1993] 199 ITR 530, where the apex court held that natural justice principles necessitate giving an opportunity to the affected party.

3. Validity of the purchase and penalty provisions under Section 23-D:
The court examined the provisions of Section 23-D and Rule 63-B, which allow the Commissioner or authorized officer to purchase goods at a price increased by 10% if underbilling is suspected. It was noted that the dealer is bound to sell the goods to the authorized officer, and refusal to sell could result in a penalty not exceeding 30% of the offer price. The court stated that the objective of Section 23-D is to prevent tax evasion through underbilling.

4. Opportunity for the petitioner to be heard and provided with relevant documents:
The court highlighted that the petitioner should have been given an opportunity to present his objections before the Deputy Commissioner. Even if the principles of natural justice were violated by not providing the petitioner with the copy of the documents, the petitioner would still have the opportunity to contest the penalty proceedings. The court referred to the case of State of Kerala v. K.T. Shaduli Yusuff [1977] 39 STC 478, which emphasized that the rule requiring an opportunity of hearing is variable depending on the nature of the inquiry and the rights affected.

The court concluded that while the petitioner's rights were not affected by the purchase order itself, full compliance with natural justice principles is required during penalty proceedings. The petitioner has the option to refuse to sell the goods, in which case penalty proceedings would be initiated, and the petitioner would be entitled to a full opportunity to present his case, including access to all relevant documents.

Conclusion:
The writ petition was dismissed, with the court observing that the petitioner's rights were not adversely affected by the purchase order, but emphasizing that full compliance with natural justice principles is necessary during any subsequent penalty proceedings. The court directed that if the petitioner refuses to sell the goods, the penalty proceedings should be conducted in accordance with the principles of natural justice, providing the petitioner with all relevant documents and a fair opportunity to present his case.