2007 (7) TMI 610 - HC - VAT and Sales Tax

notice issued under section 15A(1)(l)of the U.P. Act - Penalty imposed - Held that - There is no period of limitation prescribed for levying the penalty under the Act. The plea is founded on the basis of unreasonable delay which would depend on the facts and circumstances of each case and can more appropriately be gone into by the authority concerned under the Act. In view of the foregoing discussion we are not inclined to interfere with the show-cause notice in exercise of our jurisdiction under article 226 of the Constitution of India and leaving it open to the petitioner to file its reply before the assessing authority-respondent No. 2 raising all such points as are available to it under law. The assessing authority-respondent No. 2 shall take appropriate decision thereon in accordance with law. The writ petition is therefore dismissed on the ground of alternative remedy.

Summary

Issues:
Challenge to show-cause notice under section 15A(1)(l) of the U.P. Act; Plea of limitation for issuing the notice after ten years from the relevant assessment year; Jurisdiction to initiate penalty proceedings; Examination of form IIIB in assessment proceedings; Benefit granted based on fake declaration form; Applicability of rule 73 of U.P. Trade Tax Rules; Invocation of article 226 to challenge show-cause notices; Precedents on jurisdiction and authority of statutory authorities; Lack of prescribed limitation for penalty imposition.

Analysis:
The petitioner, a registered firm engaged in the sale of papers, challenged a show-cause notice issued under section 15A(1)(l) of the U.P. Act, seeking to quash the notice and prevent penalty proceedings. The notice was based on alleged use of a fake form IIIB by the petitioner in transactions with Sunil Paper Convertor, Kanpur. The petitioner contended that no tax liability was fixed for these transactions, questioning the jurisdiction of the assessing authority to initiate penalty proceedings. Additionally, a plea of limitation was raised due to the notice being issued after a significant delay of ten years from the relevant assessment year.

The Sales Tax Officer, in response, justified the penalty proceedings citing the use of a fake form IIIB by the petitioner to claim tax benefits. The counter-affidavit argued that the form was not issued by the department and thus, penalty imposition was warranted. The petitioner, in a rejoinder affidavit, denied these claims and reiterated that the form was accepted during assessment proceedings after due verification.

The court deliberated on the jurisdictional aspect of the show-cause notice, emphasizing that article 226 should not be invoked to challenge such notices unless no offense is disclosed or they are ex facie without jurisdiction. Referring to legal precedents, the court highlighted that points like limitation should be raised before the statutory authorities, not in writ proceedings. The absence of a prescribed limitation for penalty imposition under the Act led the court to conclude that the delay in initiating penalty proceedings should be assessed by the authority concerned based on the specific facts and circumstances of the case.

Ultimately, the court declined to interfere with the show-cause notice under article 226, directing the petitioner to respond before the assessing authority and avail all legal options. The dismissal of the writ petition was based on the availability of alternative remedies and the need for the statutory authority to decide on the matter in accordance with the law.