2013 (5) TMI 777 - HC - VAT and Sales Tax

Demand of tax - Composition Scheme - assessing officer intimated the assessee-respondents that in the light of the notifications dated March 22, 2002 and June 28, 2003, the amount payable is worked to ₹ 9,100 and after adjustment of the amount paid as per Composition Scheme, which comes to ₹ 7,560 an additional amount of ₹ 1,540 was levied on the respondents - prior to issuance of the said assessment order, no notice whatsoever was issued to the respondents-assessees and straightway, assessment order as aforesaid was passed creating an additional tax liability - held that - Vide notification dated May 7, 1999, the Composition Scheme was brought into force for registered Sarafa dealers other than MMTC Ltd., RBI or SBI or any other bank or any other corporate body, dealing in bullion, articles, ornaments and jewellery made of gold and silver notified under section 5 of the Act of 1994, which came into force with effect from April 1, 1999. The said Scheme was for a limited period of five years and all the respondents herein opted for the said Scheme and thus availed of benefits arising out of the said Composition Scheme. It is surprising that how without a proper show-cause notice, additional amount of tax could be imposed on the respondents-assessees in the light of subsequent two notifications referred to hereinabove. Even if two subsequent notifications were brought in by amendments then, it is trite law that a person has to be heard prior to imposition of any tax liability or otherwise. No person can be condemned unheard and it is settled proposition that in all such cases, principles of natural justice have to be followed particularly in fiscal laws, where without any proper show-cause notice, no liability can be inflicted upon the other side. Therefore, Tax Board as well as the Deputy Commissioner (Appeals) both have merely quashed the order passed by the assessing-officer on the prime issue that no notice was issued by the assessing-officer prior to imposition of the said additional tax. It was the duty of the assessing-officer to convey to the respondentsassessees and bring into their knowledge about the subsequent two notifications. One, who opted for Composition Scheme and complying with the directives of the said Scheme paying regular tax for 5 years during which period, the Composition Scheme was applicable then, if there was a sudden change in the amendment or a fresh notification then, it ought to be conveyed to the other side. - Since both the notifications curtailed the right of the respondents-assessees, according to me, by no stretch of imagination, they can be said to retrospective and thus they can be said to be prospective in nature only. Right conferred by the statute for some beneficial scheme cannot be curtailed by later notifications when the same benefits have accrued to the assessees and given by the Department. All necessary benefits ought to have been given its due till the period of scheme, which arise out of the said scheme. - Decided against Revenue.

Summary

Issues:
1. Whether the Rajasthan Tax Board acted legally in confirming the deletion of enhanced composition amount and interest by the Deputy Commissioner?
2. Whether the amendments to the Composition Scheme had retrospective effect on existing dealers?

Analysis:

1. The case involved multiple sales tax revision petitions challenging the order of the Rajasthan Tax Board rejecting appeals by the Department. The dispute arose from amendments to the Composition Scheme for jewellers dealing in bullion. The assessing officer levied an additional tax on dealers without issuing a prior notice, which was contested by the respondents. The Deputy Commissioner (Appeals) quashed the order, emphasizing the lack of a show-cause notice. The Rajasthan Tax Board upheld this decision, prompting the Department to file these revision petitions.

2. The Composition Scheme, introduced in 1999, was later amended via notifications in 2002 and 2003, requiring additional payments from dealers. The Department argued that these amendments had retrospective effect, justifying the additional tax imposed. However, both the Tax Board and the Deputy Commissioner (Appeals) ruled against the Department. The Court highlighted the importance of natural justice, stating that no tax liability can be imposed without proper notice. It emphasized that the right conferred by a beneficial scheme cannot be curtailed by subsequent notifications, especially when the benefits have already accrued to the assessees.

3. In a related case, the court's decision in Assistant Commercial Taxes Officer v. Yogeshwar Goyal & Sons supported the conclusion reached in this matter. The judgment favored the respondents-assessees, ruling that the Tax Board and the Deputy Commissioner (Appeals) were correct in their decision. The Court held that the amendments to the Composition Scheme were prospective, not retrospective, and that the assessees were entitled to the benefits of the scheme as per the original terms.

4. Ultimately, the Court decided against the Department, upholding the decisions of the Tax Board and the Deputy Commissioner (Appeals). The questions of law were resolved in favor of the respondents-assessees, with no costs awarded. The judgment underscored the importance of following principles of natural justice in tax matters and ensuring that statutory benefits are not unjustly curtailed by subsequent amendments.