2013 (5) TMI 454 - HC - VAT and Sales Tax

The four different establishments including a proprietorship concern, controlled by the common persons are having separate registrations under the KGST Act and are engaged in similar nature of business dealing with rice, wheat, dal etc., sharing the same roof. While so, there was a search in the premises of the petitioners, by the authorities of Sales Tax Department, when some incriminating materials were traced out. Pursuant to which, notices were given to produce the books of accounts and despite the several adjournments and various communications in between, the opportunity given was not properly utilized by the petitioners, leading to separate orders of assessment and penalty under Section 45A; which forms the subject matter of challenge in the concerned writ petitions. The first two writ petitions (W.P.(C).No12352/2005 and W.P.(C). No.10403/2012) have been filed by the very same Company, while the 3rd one (W.P.(C).No.10938/2012) is by a different Company consisting of the same person as the Managing Director and his wife being the other Director. The last writ petition (W.P. (C).No.12299/2012) is filed by the petitioner in respect of proprietorship concern, who happens to be the Managing Director of the two Companies as mentioned above, while the sole remaining Director is his wife who is also having a proprietorship concern by name South Asian Trade Links . Held that - From the above, it is seen that, but for the vague averment and lame excuse, no effective steps were taken by the petitioner Company to have responded to the notice issued for finalization of proceedings, which was pending for quite long. As mentioned already, the petitioner is not a layman or an individual, but a Company incorporated under the relevant provisions of the Indian Companies Act, 1956, who could have ensured proper representation before the concerned authority through the Company Secretary, the Chartered Accountant, Lawyer if any, or such other authorised representative. Hence interference is not called for in this writ petition. In the result, Writ Petitions 12352/2005, 10403/2012 and 10938/2012, filed by the concerned Companies are found as devoid of any merit and they are dismissed accordingly. This however shall be without prejudice to the rights and liberties of the said petitioners to avail the statutory remedy in accordance with law. In W.P(C).No.12299/2012 filed by the petitioner/individual assessee in respect of the proprietorship concern related to that Ext.P5 statement of objections as well as the request therein seeking for 30 days time to produce the books of accounts, has not been properly considered while proceeding with haste and finalizing the assessment. The first respondent is directed to pass fresh orders after giving an opportunity to produce the books of accounts and for hearing, in accordance with law, as expeditiously as possible, at any rate within three months from the date of receipt of a copy of this judgment.The petitioner is directed to appear before the first respondent with all the books of accounts and such other records or such other day to which the case is adjourned by the first respondent. It is open for the petitioner to appear either himself or through the duly authorized representative and no adjournment needs to be granted under any circumstances, but for compelling reasons to the satisfaction of the first respondent, however ensuring that the time schedule as mentioned hereinbefore is not varied.

Issues Involved:
1. Assessment and penalty proceedings for non-production of books of accounts.
2. Validity of penalty imposed under Section 45A for the assessment years 1999-2000 and 2000-2001.
3. Procedural fairness and adherence to principles of natural justice.
4. Delay in assessment proceedings and its justification.
5. Opportunity for personal hearing and response to notices.

Issue-wise Detailed Analysis:

1. Assessment and Penalty Proceedings for Non-Production of Books of Accounts:
The core issue revolves around the assessment and penalty proceedings finalized by the respondent due to the non-production of books of accounts by the concerned assessee. Despite multiple opportunities, the books were never produced, leading to the impugned orders. The search and seizure conducted on 2.2.2001 revealed incriminating materials, prompting notices for the production of books of accounts. The petitioners failed to utilize the opportunities provided, resulting in separate orders of assessment and penalty under Section 45A of the KGST Act.

2. Validity of Penalty Imposed Under Section 45A for the Assessment Years 1999-2000 and 2000-2001:
For the year 1999-2000, the sale of wheat was found to be from interstate purchases, and the petitioner showed the sales turnover as exempted without supporting evidence. The sales turnover was treated as suppressed taxable turnover. Similarly, for the year 2000-2001, the explanation offered was not deemed correct, leading to the imposition of penalties. The petitioner challenged these orders through revision petitions, but the authorities upheld the findings, confirming the penalties for 1999-2000 and remanding the case for 2000-2001 for fresh consideration.

3. Procedural Fairness and Adherence to Principles of Natural Justice:
The court examined whether the principles of natural justice were violated. It was found that the petitioners were given ample opportunities to respond to notices and attend personal hearings. The authorities followed due process, and the petitioners' non-cooperation and refusal to accept notices were documented. The court concluded that there was no violation of natural justice principles, and the factual and legal analyses by the authorities were thorough and proper.

4. Delay in Assessment Proceedings and Its Justification:
The petitioner argued that the assessment proceedings, particularly for the year 2001-2002, were delayed unjustifiably. The court noted that the authorities issued Section 17(3) notices only in late 2010, despite the assessment year being 2001-2002. The delay was attributed to the petitioner's non-cooperation and evasion tactics. The court found no substantial justification for the delay from the authorities, but it emphasized the petitioner's responsibility to respond promptly to notices.

5. Opportunity for Personal Hearing and Response to Notices:
The petitioners claimed that they were not given adequate opportunities for personal hearings and to respond to notices. The court reviewed the sequence of events, including multiple notices and attempts to serve them. It was found that the petitioners either refused to accept notices or did not respond adequately. The court emphasized that the petitioners, being companies with resources to ensure proper representation, failed to utilize the opportunities provided. In one case, the petitioner cited personal reasons (brother's surgery) for non-response, but the court found this excuse insufficient to evade legal processes.

Conclusion:
The court dismissed the writ petitions filed by the companies, finding no merit in their arguments and upholding the assessment and penalty orders. However, in the case of the individual petitioner (proprietorship concern), the court set aside the assessment order and related notices, directing the respondent to pass fresh orders after giving an opportunity to produce books of accounts and for a hearing. The court mandated a strict timeline for compliance and emphasized the need for the petitioner to cooperate fully in the proceedings.

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