2016 (2) TMI 136 - HC - VAT and Sales Tax

Demand of VAT on Kerosene for Public Distribution System - Unreported sale due to deceit and fraud committed by the erstwhile staff - However, the learned counsel for the petitioner though raised various grounds on legality, seeks indulgence of this Court for providing them an opportunity for producing documentary evidences along with detailed reply to the notice already issued. Since the partner Mr.Kamalakumar suddenly passed away, this Court is inclined to consider the request made by the learned counsel for the petitioner in the interest of justice. - Matter remanded back.

Summary

Issues: Challenge to order of respondent in TIN 33114440012/2012-13 dated 9.4.2015 under Article 226 of the Constitution of India.

Analysis:
1. The petitioner, a partnership firm, dealt with II Schedule goods under the Act as a dealer of M/s Bharat Petroleum Corporation Limited. Due to the illness and subsequent demise of the authorized person in charge of commercial activities, chaos, confusion, and fraud ensued, leading to discrepancies in tax filings.
2. The petitioner argued that the sales of goods such as Petrol, Kerosene, and Diesel, categorized as II Schedule goods, were not properly accounted for in the tax returns due to staff negligence. They contended that the sales of Kerosene were exempt from tax as they held a license for distribution under the Public Distribution System.
3. Following the reconstitution of the partnership firm after the demise of the authorized person, the respondent issued a notice proposing a revision of assessment based on undisclosed purchases. The petitioner claimed that no objection was filed as they were unaware of the proceedings, and the assessment order was passed without a personal hearing, contrary to the law.
4. The petitioner challenged the impugned order on grounds of procedural lapses, lack of jurisdiction to tax the dissolved partnership firm, and incorrect taxation of Kerosene sales meant for public distribution. They sought the quashing of the order.
5. The Additional Government Pleader argued that the order was valid as notice was served before the assessment order was passed.
6. The Court acknowledged the petitioner's difficulties in responding to the notice due to the sudden demise of the active partner and granted an opportunity to submit objections and evidence, setting aside the impugned order and remitting the matter back to the respondent for reevaluation based on the new submissions within a specified timeframe. Failure to comply would allow the respondent to proceed with appropriate orders.

This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented by the petitioner and the respondent, as well as the Court's decision and reasoning in resolving the matter.