2002 (2) TMI 1309 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to notice under Rajasthan Sales Tax Act, 1994 for evasion of tax by a private limited company engaged in manufacturing marble slabs and tiles.

Analysis:
The petitioner, a private limited company engaged in manufacturing marble slabs and tiles, sought to quash a notice issued by the Commercial Taxes Officer under sections 29, 58, 61, and 65 of the Rajasthan Sales Tax Act, 1994. The notice was based on findings of evasion of Central excise duty and under-valuation of goods, leading to demands aggregating to significant amounts. The authorities had recovered some amounts, but substantial sums remained outstanding. The notice required the petitioner to explain a shortage of stock tentatively assessed at a specific amount. The petitioner argued that additions based on stock shortages could not be treated as profits from unaccounted sales, citing relevant court decisions. However, the court found the contention unsustainable, emphasizing the need for the petitioner to respond to the show cause notice before challenging the tax evasion allegations. The court highlighted evidence of tax evasion and declined to intervene through extraordinary jurisdiction under article 226 of the Constitution, stating that assisting tax evaders would be an abuse of the court's process. The court concluded that the petition lacked merit and dismissed it accordingly.

In summary, the judgment addressed the challenge to a notice under the Rajasthan Sales Tax Act, 1994 issued to a private limited company for alleged tax evasion related to Central excise duty and under-valuation of goods. The court emphasized the importance of responding to show cause notices before disputing tax evasion allegations and declined to intervene, citing evidence of evasion and the need to prevent abuse of the court's process. Ultimately, the court dismissed the petition for lacking merit.