2012 (3) TMI 393 - HC - VAT and Sales Tax

Tax demand with a penalty under section 37(6) of the Jharkhand Value Added Tax Act, 2005 - Held that - The petitioner may avail of the alternative statutory remedy to assail the impugned order of assessment and penalty as well as the consequent notice of demand before the prescribed authority, where it can raise all such issues of law as well as fact, available to it. This court, therefore, does not consider it proper to exercise its discretionary jurisdiction at this stage and the writ petition is accordingly, dismissed.

Issues Involved:
1. Quashing of proceedings initiated pursuant to notice dated July 16, 2011.
2. Validity of the order dated August 13, 2011, passed by the Deputy Commissioner of Commercial Taxes.
3. Legality of the demand notice No. 527 dated August 13, 2011.
4. Imposition of penalty under section 37(6) of the Jharkhand Value Added Tax Act, 2005.
5. Availability and exhaustion of alternative statutory remedies.

Detailed Analysis:

1. Quashing of Proceedings Initiated Pursuant to Notice Dated July 16, 2011:
The petitioner sought to quash the entire proceedings initiated pursuant to the notice dated July 16, 2011, which included an audit objection for the financial year 2007-08. The notice required the petitioner to appear and furnish an explanation. The petitioner complied by submitting a detailed show-cause reply. However, the assessing officer found the reply unconvincing and proceeded with the assessment based on the audit objection.

2. Validity of the Order Dated August 13, 2011:
The order dated August 13, 2011, was passed by the Deputy Commissioner of Commercial Taxes, assessing a VAT liability of Rs. 19,99,496.68 and imposing a penalty of Rs. 39,98,993.36 under section 37(6) of the Jharkhand Value Added Tax Act, 2005. The assessment was based on discrepancies between the revised annual returns filed by the petitioner and the audit report JVAT 409. The petitioner argued that the order was issued under section 40, which deals with turnover escaping assessment, without following the prescribed procedure.

3. Legality of the Demand Notice No. 527 Dated August 13, 2011:
The demand notice was issued pursuant to the assessment order, demanding a total sum of Rs. 59,98,490.04. The petitioner challenged the demand notice on the grounds that it was issued without proper procedure and without giving an opportunity for a hearing as required under section 37(6).

4. Imposition of Penalty Under Section 37(6):
The petitioner contended that the penalty was imposed without issuing a notice under section 37(6), which mandates giving the dealer a reasonable opportunity of being heard. The respondents justified the penalty, stating that the audit objection and subsequent cross-verification revealed discrepancies that warranted the imposition of tax and penalty under the Act.

5. Availability and Exhaustion of Alternative Statutory Remedies:
The respondents argued that the petitioner had an alternative statutory remedy available in the form of an appeal or revision before the Commissioner of Commercial Taxes. The court emphasized that the petitioner should exhaust these remedies before seeking relief under Article 226 of the Constitution of India. The court cited the Supreme Court's decision in United Bank of India v. Satyawati Tondon, which stressed the necessity of exhausting alternative remedies in matters involving revenue.

Conclusion:
The court dismissed the writ petition, stating that the petitioner should avail the alternative statutory remedies available under the Jharkhand Value Added Tax Act, 2005. The court held that it is not proper to exercise its discretionary jurisdiction when an efficacious alternative remedy is available, especially in matters involving revenue. The petitioner was advised to raise all issues of law and fact before the prescribed authority through the statutory appeal or revision process.

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