2015 (8) TMI 1354 - HC - VAT and Sales Tax

Short payment of Entry Tax - concealment of facts - escapement of assessment - whether in the proceedings u/s 31 of the Act, it was open to the Assessing Officer to have proceeded in the manner as if he was making an initial assessment under Section 25 of the Act? Held that - It is an established principle that in the course of making re-assessment of tax on account of escaped turnover or some such reason, it is open to the Officer to go beyond the notice issued so as to recover any tax which is found to be clearly due on the basis of the materials on the record but the same does not give any right to the Assessing Officer to raise issues as though he was conducting a fishing or roving enquiry in the matter. There was nothing in the audit objection with regard to the goods having been sent out of the State after use nor anything has been placed before us in the pleadings of the respondents to show that there was any material before the Assessing Officer to show that the goods had been transferred out of the State after use within the State - in the proceedings under Section 31 of the Act, it was not open to the Assessing Officer to have proceeded in the manner as if he was making an initial assessment under Section 25 of the Act. But, there was no inherent lack of jurisdiction in the Assessing Officer to have proceeded in the matter not only with regard to the year 2012-13, for which the audit objection had been made but also for the other years if the reasons given in the audit objection were applicable to them also and thus initiation of proceedings under Section 31 of the Act for the other years cannot be held to be without jurisdiction. Petition allowed - matter remanded to AO to be decided afresh.

Issues Involved:
1. Re-assessment under Section 31 of the Bihar Value Added Tax Act, 2005.
2. Audit objection and its implications.
3. Imposition of penalty under Section 31(2) of the Bihar VAT Act.
4. Procedural fairness in granting time to produce documents.
5. Interpretation of statutory forms and the requirement to disclose particulars.
6. Jurisdiction of the Assessing Officer to initiate proceedings based on audit objections.
7. Burden of proof under the Bihar Entry Tax Act.
8. Relevance of intention at the time of import for levy of entry tax.

Detailed Analysis:

Re-assessment under Section 31 of the Bihar Value Added Tax Act, 2005:
The court addressed the issue of re-assessment for the periods 2009-10, 2011-12, 2012-13, and 2013-14 under Section 31 of the Bihar VAT Act. The petitioner argued that the Assessing Officer failed to consider the difficulties in producing evidence for multiple years within a short period, especially when the audit objection was initially for only one year (2012-13).

Audit Objection and its Implications:
An audit objection was raised by the Accountant General (Audit), Bihar for the year 2012-13, stating the petitioner had underpaid entry tax and concealed purchase turnover. Notices were subsequently issued for other periods (2009-10, 2011-12, and 2013-14). The petitioner contended that the Assessing Officer should have recorded satisfaction based on facts and materials before initiating proceedings for these additional years.

Imposition of Penalty under Section 31(2) of the Bihar VAT Act:
The petitioner argued that for imposing a penalty under Section 31(2), there must be concealment, omission, or failure to disclose full and correct particulars. The court noted that the Assessing Officer must make an assessment based on materials on record and that penalties should not be imposed merely on the basis of discrepancies found in returns already filed.

Procedural Fairness in Granting Time to Produce Documents:
The petitioner requested additional time to produce documents due to the centralized finance and accounts department's need to retrieve data. The court found that the Assessing Officer should have granted ample time, especially considering the re-assessment was for previous years extending back to 2009-10.

Interpretation of Statutory Forms and Requirement to Disclose Particulars:
The petitioner argued that the statutory forms (ET Form-05) did not have a column for inter-State sales or stock transfers, and thus, they had fully disclosed all required information. The court agreed that if the form itself lacks provision for certain information, failure to provide such information cannot be deemed concealment.

Jurisdiction of the Assessing Officer to Initiate Proceedings Based on Audit Objections:
The court held that the Assessing Officer had jurisdiction to initiate proceedings for years other than 2012-13 if the reasons in the audit objection applied to those years as well. However, the assessment and penalty must be based on concrete materials and not merely on the basis of the audit objection.

Burden of Proof under the Bihar Entry Tax Act:
The petitioner contended that the burden was wrongly placed on them to prove that stock transfers were not made after use. The court noted that the petitioner only needed to show that goods imported into a local area were not used for consumption, use, or sale and were instead sent out of the state. Any contrary claim by the revenue must be supported by material evidence.

Relevance of Intention at the Time of Import for Levy of Entry Tax:
The court disagreed with the respondents' argument that intention not to consume or use goods must be present at the time of import. It emphasized that what matters is the actual course of conduct, and if goods were not consumed, sold, or used within the local area, entry tax cannot be levied.

Conclusion:
The court quashed the impugned orders and remanded the matters to the Assessing Officer for fresh consideration in accordance with the law and principles laid down in the judgment. The petitioner was directed to appear before the Assessing Officer with necessary documents and evidences, and the Assessing Officer was instructed to pass appropriate orders if the petitioner faced difficulties in obtaining evidence from earlier vendors.

The comprehensive judgment ensures procedural fairness, correct interpretation of statutory provisions, and emphasizes the need for concrete evidence before imposing penalties.

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