2014 (9) TMI 898 - HC - VAT and Sales Tax

Rejection of input tax claim - failure to submit VAT C-4/original tax invoices as required under Section 8 - Non service of notice - Tribunal nullified assessment - Held that - Notice was not validly served upon the assessee in terms of Rule 79 of the Haryana Value Added Tax Rules, 2003. The Tribunal had come to the conclusion that the identity of the person to whom the notice was served was not established. Further, in pursuance to the notices dated 21.11.2008 and 23.6.2009, why no action was taken and exparte proceedings were not initiated if valid notice was served. It was also held that Manoj Kumar was never employed as accountant of the dealer-firm. The findings of fact were not shown to be erroneous. Even otherwise, on merits, the Joint Excise and Taxation Commissioner (Appeals) has noticed that against the gross taxable turnover of ₹ 1,55,42,195/-, the dealer was in possession and had produced VAT C-4 and tax invoices amounting to ₹ 1,55,04,710/- and wanted the same to be accepted in appeal stage. The dealer was entitled to the benefit of input tax credit and the liability could have been fastened only on the remaining amount. Furthermore, the appeal is barred by 345 days. Accordingly, an application under Section 5 of the Limitation Act, 1963 has been filed for condonation of delay in filing the appeal. The reasons mentioned in the application do not fall within the expression 'sufficient cause' - Decided against Revenue.

Summary

Issues:
1. Validity of notice served on the assessee.
2. Justification of the Tribunal's decision in dismissing the review petition.
3. Assessment based on the input tax claim rejection.
4. Barred appeal and application for condonation of delay.

Issue 1: Validity of notice served on the assessee:
The appeal was filed against an order where the Tribunal dismissed the review petition regarding the service of notice to the assessee. The Tribunal found that the notice was not validly served on the assessee as per Rule 79 of the Haryana Value Added Tax Rules, 2003. It was noted that the identity of the person to whom the notice was served was not established. The Tribunal highlighted the lack of action taken on previous notices served and the failure to initiate exparte proceedings. The person claimed to have been served, Manoj Kumar, was found to have never been employed as the accountant of the dealer-firm. The Tribunal concluded that the statutory notice was not served as required, making the assessment time-barred under Section 15(2) of the Act. Consequently, the impugned orders were quashed, and the appeal was allowed.

Issue 2: Justification of the Tribunal's decision in dismissing the review petition:
The State counsel argued that the notice was duly served on Shri Manoj Kumar, who was employed by the assessee-firm for maintaining accounts. However, upon review, the High Court did not find merit in the appeal. The Tribunal's decision was based on the failure to establish the identity of the person served with the notice, leading to the conclusion that the notice was not validly served. The Tribunal's decision to dismiss the review petition was upheld by the High Court.

Issue 3: Assessment based on the input tax claim rejection:
The dealer's input tax claim was rejected due to the failure to submit VAT C-4/original tax invoices as required under the Act. The assessment was framed exparte, creating an additional demand. The dealer appealed the assessment, leading to a remand back to the assessing authority. Instead of approaching the assessing authority, the dealer directly filed an appeal before the Tribunal. The Tribunal allowed the appeal, quashing the previous orders due to the lack of established identity of the person served with the notice.

Issue 4: Barred appeal and application for condonation of delay:
The appeal was found to be barred by 345 days, prompting an application for condonation of delay under Section 5 of the Limitation Act, 1963. However, the reasons provided in the application were deemed insufficient to justify the delay. As a result, the High Court dismissed both the appeal and the application for condonation of delay.

This comprehensive analysis of the judgment delves into the various issues involved, highlighting the legal intricacies and the reasoning behind the High Court's decision in each aspect of the case.