2007 (8) TMI 696 - HC - VAT and Sales Tax

Revision of taxable turnover at ₹ 19,80,19,000 at 20 per cent, besides levying penalty at 150 per cent - Held that - A perusal of the revision notice discloses that the petitioner is not provided with reasonable opportunity to put forth his case. It is settled law that if any irregularities, commissions or defects or violations of law are noticed by the respondent, the assessee should be given adequate opportunity of rebutting the allegations made against them with supportive documents. In the instant case, as the impugned notice is bereft of all the details and records said to have been recovered and formed the basis of the show-cause notice, it may not be possible for the petitioner to effectively defend the show-cause notice. Under such circumstances, the impugned show-cause notice is liable to be set aside and accordingly, it is set aside. However, it is open to the assessing officer to issue a fresh show-cause notice to the petitioner containing all the details of records recovered from the business premises, within three weeks from the date of receipt of a copy of this order.

Summary

Issues:
Assessment based on inspection findings and news report, Revision notice defects and omissions, Lack of reasonable opportunity for the assessee to defend against allegations.

Analysis:
The petitioner, engaged in the sale of scientific equipment and hosiery garments, was initially assessed for the year 2003-04 with a total turnover of Rs. 51,22,919. Subsequently, enforcement officials found discrepancies during an inspection, where the petitioner had paid sales tax at 4% instead of 20% on imported machinery spares. The officials also noted a news report claiming the sale of 110 knitting machines, which the petitioner contested, stating they acted as agents for commission. The revision notice issued by the respondent proposed to revise the taxable turnover to Rs. 19,80,19,000 at 20% tax, along with a 150% penalty.

The petitioner challenged the revision notice in a writ petition, arguing that the notice was based on D3 proposals from enforcement officials without independent assessment. The petitioner contended that the allegations of sales suppression were not supported by inspection notes or statements recorded during the inspection. Citing precedent, the petitioner emphasized that the assessing officer should not be bound by enforcement instructions and that the notice lacked a valid basis for revision based on a newspaper report.

The Additional Government Pleader defended the revision notice, stating it was issued after examining business premises and records, with the news report serving as additional information. However, the court found that the petitioner was not given a reasonable opportunity to rebut the allegations, as the notice lacked specific details and records for the petitioner to effectively defend against the accusations. Consequently, the court set aside the impugned notice.

The court directed the assessing officer to issue a fresh show-cause notice to the petitioner within three weeks, containing all relevant details and records recovered from the business premises. The petitioner would then have the opportunity to review the records and submit objections within the specified timeline. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.