1995 (2) TMI 420 - AT - VAT and Sales Tax

Issues Involved:
1. Legality of the demand notice dated December 8, 1983.
2. Compliance with the principles of natural justice.
3. Validity of the documents (declarations in form IV and money receipts in form V) submitted by the applicant.
4. Proper opportunity for the applicant to inspect documents and cross-examine officials.
5. Whether the assessment was made according to law.

Detailed Analysis:

1. Legality of the Demand Notice Dated December 8, 1983
The applicant challenged the demand notice dated December 8, 1983, issued under section 14(3) of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972. The notice required the applicant to pay Rs. 1,35,349.50 as tax and an equal amount as a penalty. The Tribunal noted that the applicant had paid the entry tax for the goods during the period from September 1982 to December 1982, and had been granted receipts in form V for such payment. However, the respondent contended that the applicant imported 41 consignments of television sets, out of which 11 consignments did not have the required declarations in form IV, and the money receipts in form V were tampered and interpolated.

2. Compliance with the Principles of Natural Justice
The applicant argued that the assessment and imposition of penalty violated the principles of natural justice as the applicant was not afforded a reasonable opportunity of hearing. The Tribunal found that the Entry Tax Officer did not produce the requested documents or the officials who signed the declarations and money receipts for cross-examination. Furthermore, the Tribunal noted that the applicant's representative was not given access to the office copies of the documents, which was essential for a fair hearing.

3. Validity of the Documents Submitted by the Applicant
The respondent claimed that the declarations in form IV and money receipts in form V produced by the applicant were manufactured and tampered with. The Tribunal observed that the Entry Tax Officer condemned the declarations in form IV as manufactured documents and found the money receipts in form V to be tampered and interpolated. However, the Tribunal noted that the Entry Tax Officer relied on the same documents to gather details for the assessment, which indicated an irreconcilable approach.

4. Proper Opportunity for the Applicant to Inspect Documents and Cross-Examine Officials
The Tribunal emphasized that the applicant had requested the presence of the officials who signed the declarations and money receipts for cross-examination, which was not complied with by the respondent. The Tribunal found that the Entry Tax Officer did not meet the applicant's reasonable requisition for documents and officials during the hearing, thereby violating the principles of natural justice.

5. Whether the Assessment Was Made According to Law
The Tribunal noted that the assessment should be made after inspection and verification of the goods. Since physical verification was not undertaken, the assessment should have been made to the best of the ability of the prescribed authority after examining the books of accounts and other records. The Tribunal found that the Entry Tax Officer discarded the documents produced by the applicant without providing any alternative source of information for the assessment. This lack of transparency and failure to disclose the basis of the assessment to the applicant rendered the assessment unlawful.

Conclusion:
The Tribunal set aside the impugned assessment and imposition of tax, concluding that the assessment was not made according to law and violated the principles of natural justice. The application was allowed, and the demand notice dated December 8, 1983, was quashed. The Tribunal also noted the lack of proper investigation by the respondent into the discrepancies found in the documents and emphasized the need for fair play in the assessment process.

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