2013 (3) TMI 473 - HC - VAT and Sales Tax

Tax Evasion - no evidence was produced by the assessee inspite of allowing time to produce the record, and on the basis of this, the Assessing Officer had passed the assessment order reiterating the earlier assessment order - Held that - While as per the remand order, the Assessing Officer was required to frame a fresh assessment order after complying the remand order passed by the Revisional Authority, but it appears that mechanically assessment order was passed by the Assessing Officer. When remand order was very specific in respect of certain directions, then those points ought to have been considered by the Assessing Officer even without production of any material by the assessee. The Assessing Officer ought to have recorded a fresh finding that there was tax evasion by the petitioner, on the basis of some material and documentary evidence tax evasion was found proved. But, in the Assessment Order and Revisional Order we do not find any such finding while it was necessary for the Assessing Officer and Revisional Authority to record such findings. From the perusal of the impugned order, it is find that after narration of the facts, the Revisional Authority because of non-production of any material before it by the petitioners reiterated the earlier order only, while as per directions issued by the Revisional Authority the Assessing Authority was under an obligation to meet out all the directions, but it appears that the Assessing Officer impressed with the fact that no evidence was produced before it by the assessee reiterated the earlier order, while it was under an obligation to decide the matter as directed by the Revisional Authority. When the important and vital issues are not considered by the Assessing Officer, the assessment order after remand cannot be sustained under the law - the petitioner shall cause appearance before the Assessing Officer on 04.03.2013.

Issues Involved:
1. Legality of the Special Task Committee's findings and report.
2. Denial of tax exemptions based on the findings of the Special Task Committee.
3. Validity of the assessment and revision orders.
4. Compliance with remand orders and the procedural fairness in reassessment.
5. Opportunity for the petitioner to present evidence and cross-examine witnesses.

Detailed Analysis:

1. Legality of the Special Task Committee's Findings and Report:
The petitioner challenged the findings of the Special Task Committee, arguing that the committee's report was biased and devoid of available facts and evidence. The court noted that the Revisional Authority had previously found the task force's report to be non-speaking and unsupported by documentary evidence. The court emphasized that a finding based solely on such a report, without proper evidence, could not be sustained.

2. Denial of Tax Exemptions:
The petitioner contended that their industrial unit was engaged in the manufacturing of coal briquettes and thus eligible for tax exemptions. The court referred to a previous case (M/s Shri Sharda Domestic Fuels Pvt. Ltd. vs. The State of M.P. and others) where it was held that merely on the basis of the task force's report, which was non-speaking, it could not be decided that the unit was closed before three years of the inspection. The court reiterated that the burden of proof was on the Department to establish tax evasion, which was not adequately done.

3. Validity of the Assessment and Revision Orders:
The petitioner sought to quash the assessment and revision orders passed by the respondents. The court found that the Assessing Officer had not complied with the specific directions issued in the remand order. It was noted that the assessment order was passed mechanically without addressing the vital issues and directions provided by the Revisional Authority. The court held that such orders could not be sustained under the law and required a fresh assessment.

4. Compliance with Remand Orders and Procedural Fairness:
The court observed that the remand order (Annexure P/5) had issued specific directions to the Assessing Officer, which were not duly complied with. The Revisional Authority had directed the collection of evidence regarding tax evasion and the extension of an opportunity to the petitioner to rebut the allegations. However, the Assessing Officer failed to meet these directions, leading to a reiteration of the earlier order without proper consideration of the remand instructions. The court emphasized the necessity for the Assessing Officer to comply with the remand order in letter and spirit.

5. Opportunity for the Petitioner to Present Evidence and Cross-Examine Witnesses:
The petitioner argued that they were not given an opportunity to cross-examine the officers who submitted the task force report. The court highlighted that the Revisional Authority had found that the petitioner was not extended an opportunity to explain and prove evidence. The court held that the Assessing Officer should have allowed the petitioner to present their evidence and explanation before passing a speaking order. The failure to provide such an opportunity was a significant procedural lapse.

Conclusion:
The court, finding the issues raised by the petitioner to be valid, quashed the impugned orders and remanded the matter back to the Assessing Officer. The court directed the Assessing Officer to comply with the remand order (Annexure P/5) and to extend a fair opportunity to the petitioner to submit their explanation. The petitioner was instructed to appear before the Assessing Officer on 04.03.2013, and no fresh notice was deemed necessary. The petitions were disposed of with no order as to costs.

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