2007 (6) TMI 496 - AT - VAT and Sales Tax

Summary

Issues:
Jurisdiction of Assistant Commissioner to issue notice under VAT Act.

Analysis:
The judgment revolves around the challenge to the legality and validity of a notice issued by the Assistant Commissioner of Sales Tax under the West Bengal Value Added Tax Act, 2003. The petitioner, claiming to be a partner in a business firm, contested the authority of the Assistant Commissioner attached to the Audit Wing to issue the notice. The main argument presented was that the Assistant Commissioner lacked the jurisdiction to issue the impugned notice. The petitioner contended that only the Commissioner of Sales Tax could lodge a complaint with the police under the VAT Act, but the petitioner failed to provide any specific provision in the Act or Rules empowering only the Commissioner to do so. It was highlighted that any officer of the Sales Tax Directorate could report a cognizable offence to the police, subject to any administrative procedures in place. The Assistant Commissioner, based on a prima facie belief that the partners of the firm committed offences under the VAT Act, issued the notice to provide an opportunity for the partners to respond and present their explanations before any further action was taken.

The Tribunal examined the provisions of the VAT Act, particularly Section 43 which deals with audit of accounts, and Section 93 which enumerates offences under the Act. Notably, offences under Section 93(6) and 93(7) involve wilful attempts to evade tax or produce incorrect accounts, punishable with imprisonment. The judgment emphasized that while there was no specific rule prescribing the procedure for lodging a complaint under Section 93, internal administrative procedures or guidelines might regulate the process. It was clarified that the Assistant Commissioner's notice, providing an opportunity for the partners to be heard before any complaint was lodged, did not violate statutory requirements. The Tribunal concluded that the notice was not illegal or infirm, and the partners were free to choose whether to respond or not. If the partners chose not to engage, the concerned officer could proceed in accordance with the law and prescribed procedures for lodging a complaint with the police.

In summary, the judgment upholds the legality of the notice issued by the Assistant Commissioner, emphasizing the importance of providing an opportunity for the accused parties to respond before any formal complaint is lodged. The decision underscores the administrative discretion available to the Sales Tax Directorate officers in handling such matters, ensuring procedural fairness while maintaining the authority to take further action if necessary.