2016 (5) TMI 386 - HC - VAT and Sales Tax

Allowability of change of place of business - Application rejected on the ground that a belated application was filed, inasmuch as the petitioner shifted his place of business on 20.01.2013 without previous intimation and that the application for change of place of business was filed after 11 months on 05.12.2013. Also the petitioner did not give details of closure of its business at Noida nor filed the filing fee of ₹ 20/-. Held that - the application form of the petitioner in Form No. VII only required the petitioner to provide information of the principal place of business and that was at Noida. The other place of business indicated by the petitioner was at Banglore outside the State of U.P. Thus, the change of declaration required under sub-rule (8) of Rule 6 of the Rules, which requires written permission of the Commissioner was not required to be done by the petitioner. Rule 6(8) has no application in the instant case and could not be relied upon by the respondents. The ground for rejecting the application for change of place of business on the ground that the application was filed belatedly is patently erroneous. The registering authority has not considered the provisions of Section 17 (14) (a) of the Vat Act, which makes it obligatory upon the registering authority to carry out the amendment irrespective of the fact that the application was not furnished within the prescribed period as provided under Section 75 of the Act. We further find that there is no finding that the petitioner is still or simultaneously carrying on his business at Noida as well as at Ghaziabad. In the absence of this finding, the application for change of place of business could not be rejected. It is found that the petitioner s application on the ground of nonfurnishing ₹ 20/- as filing fees was not an incurable defect and that the same could have been cured. The registering authority could not reject the petitioner s application on this ground and should have allowed the petitioner to cure the defect. Therefore, the order rejecting the petitioner s application for change of place of business was wholly illegal and, cannot be sustained. Ex parte provisional assessment order passed - no notices were served - Respondent contended that proper service was made by refusal as well as by affixation and there was no illegality in the service of the summons. Also the petitioner has a remedy of filing an appeal against the assessment orders and that it was not necessary to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India - Held that - the rule of alternative remedy is not a bar for entertaining the writ petition. No doubt it is a rule of discretion but in the instant case, there would be a travesty of justice if we relegate the petitioner to the alternative remedy of an appeal. There is a total abdication by the respondents in adhering to the process of service of summons under Rule 72 of the Rules. Rule 72 of the Rules has been ignored and a procedure which is not known to law has been adopted. Rule 72(a) of the Rules provides that the service of summons is required to be made on a dealer or a person concerned in person or his agent. Here, the report of process server indicates that there was no Firm at the Noida address. At the Ghaziabad address, the process server met one person, who refused to divulge his name but clearly indicated as to which person would receive the notice. The process server, however, indicates service by refusal. In our opinion, the report of the process server is wholly illegal. There is no finding that the person who refused to accept the notice was a dealer or a person concerned in person or an agent empowered to accept the notice. In the absence of any report to this effect we are of the opinion that there is no valid service by refusal. Admittedly, the Assessing Authority has no jurisdiction to effect service of summons outside his territorial jurisdiction. Territorial jurisdiction of the Assessing Authority was Noida. Ghaziabad was outside his territorial jurisdiction. Thus, the Assessing Authority could not serve the summons to the petitioner at Ghaziabad address through or his process server. The Assessing Authority was required to adopt the procedure as per clause (j) and (k) of Rule 72 of the Rules, which in the instant case was not followed. Under this sub clause, the Assessing Authority is required to send the summons to the assessing authority where the dealer resides and through that Assessing Authority the service is required to be effected. On this ground also, it is held that there is no proper service of the summons at the Ghaziabad address. Also the affixation made under clause (e) of Rule 72 of the Rules was done at Noida address. This affixation at Noida was patently illegal and could not be held to be a proper notice by affixation, inasmuch as the respondents knew that the petitioner had shifted his place of business and there was no one at the Noida address. The respondents have not come with a stand that the petitioner is simultaneously carrying on his business at Noida as well as at Ghaziabad. In fact, the respondents admit that the petitioner has shifted his place of business from Noida to Ghaziabad. There is another aspect, that clause (h) of Rule 72 of the Rules has not been followed which requires the summons to be sent by registered post acknowledgment due in addition to personal service unless dispensed with by the Assessing Authority. In the instant case, there is nothing to indicate that the assessing authority had dispensed with the service of summons by registered post. Therefore, it is apparently clear that there was no valid service of summons and consequently, ex-parte proceedings were taken based on which ex-parte assessment orders were passed which can not be sustained and are liable to be quashed. It is found that pursuant to the ex-parte assessment orders, a sum of ₹ 49.82 crores was realized after attaching the bank account which included the admitted amount of ₹ 3.3 crores. Therefore, the petitioner s application could not be rejected on the ground that the admitted tax of ₹ 3.3 crores was not deposited by the petitioner. Once the amount has been realized, it was not open to the petitioner to deposit any further amount. Consequently, the order rejecting the recall application could not be sustained. Hence, the exparte assessment orders passed by the assessing authority, for the period April to October, 2015 under U.P. VAT Act and Central Sales Tax Act are quashed. The garnishee notices and the subsequent proceedings initiated thereto by attachment of the bank account and withdrawal of the amount of ₹ 49,82,01,250/- being wholly illegal and without any authority of law are also quashed. The order rejecting the recall application filed under Section 32 of the Vat Act being wholly erroneous is also quashed. The order rejecting the petitioner s application for change of place of business filed under Section 75 of the Vat Act read with Rule 33 of the Rules being wholly illegal is also quashed. - Decided in favour of petitioners

Summary

Issues Involved:
1. Application for change of principal place of business.
2. Ex-parte assessment orders and service of notices.
3. Attachment and withdrawal of funds from the petitioner's bank account.
4. Rejection of recall application for ex-parte assessment orders.
5. Jurisdiction of the assessing authority.

Issue-wise Detailed Analysis:

1. Application for Change of Principal Place of Business:
The petitioner, a company engaged in trading goods, applied for a change of its principal place of business from Noida to Ghaziabad on 05.12.2013. The application was rejected on 02.09.2014 due to the delay in filing and lack of details about the closure of the Noida business. The petitioner argued that no opportunity for a hearing was provided, making the order violative of Section 75 of the U.P. Value Added Tax Act (Vat Act) and Rule 33 of the U.P. Value Added Tax Rules. The court found that Rule 6(8) requiring previous written permission from the Commissioner for changing the principal place of business was not applicable in this case. The application should have been processed under Section 75 and Rule 33. The court held that the rejection based on delay and non-payment of a filing fee was erroneous and directed the registering authority to process the application.

2. Ex-parte Assessment Orders and Service of Notices:
The petitioner contended that ex-parte assessment orders for the years 2011-12, 2013-14, and 2014-15 were passed without proper notice, as the notices were sent to the old Noida address despite the petitioner having shifted to Ghaziabad. The court found that the service of notices was not conducted as per Rule 72 of the Rules, which requires personal service or service on an agent. The affixation of notices at the Noida address was deemed invalid since the respondents were aware of the change in the petitioner's business address. The court quashed the ex-parte assessment orders due to improper service of summons.

3. Attachment and Withdrawal of Funds from the Petitioner's Bank Account:
Following the ex-parte assessment orders, the petitioner's bank accounts were seized, and Rs. 49.82 crores were withdrawn. The court found this action illegal and without authority, as the assessment orders were quashed. The court directed the respondents to refund the amount along with interest as per Section 40 of the Vat Act, after adjusting the admitted tax.

4. Rejection of Recall Application for Ex-parte Assessment Orders:
The petitioner's recall application was rejected on the grounds of being filed beyond the stipulated period and non-deposit of the admitted tax. The court held that the rejection was erroneous as the limitation period could not start from the date of affixation at the Noida address due to improper service. Additionally, since the amount of Rs. 49.82 crores had already been realized, the petitioner could not be required to deposit any further amount. The court quashed the order rejecting the recall application.

5. Jurisdiction of the Assessing Authority:
The petitioner argued that the assessing authority at Noida had no jurisdiction to serve notices or make assessments for the Ghaziabad address. The court noted that the assessing authority could not serve summons outside its territorial jurisdiction without following the procedure under Rule 72(j) and (k). The court did not delve deeply into this issue but allowed the petitioner to raise it before the appropriate forum if fresh notices were issued.

Conclusion:
The court quashed the ex-parte assessment orders, the garnishee notices, and the rejection of the recall application. It directed the registering authority to process the application for change of place of business and ordered the refund of the withdrawn amount with interest. The court also imposed costs of Rs. 2,00,000 on the Commercial Tax Department for the petitioner. The judgment emphasized the need for proper service of notices and adherence to procedural rules, criticizing the respondents' conduct in handling the assessment and recovery process.