2019 (6) TMI 1345 - HC - VAT and Sales Tax

Constitutional validity of sub-rule (5) of Rule 41 of the Assam Value Added Tax Rules 2005 - validity of circulars dated 08.09.2011 18.11.2011 14.03.2012 14.03.2012 and 18.05.2012 - power vested with the Commissioner to issue circulars - HELD THAT - Through the proviso the Commissioner is empowered to direct the relevant information in the electronic format to be uploaded. Such proviso is a part of the Rule which is framed by the Government by which it provides for the Commissioner to issue appropriate directions. The same cannot be considered as sub-delegation of the power. Hence the contention in that regard cannot be accepted and the decisions rendered would not be relevant for the said purpose. Levy of penalty - failure to upload the documents in electronic form - documents required to accompany the goods - Held that - Though sub-rule (5) to Rule 41 provides for uploading the documents in electronic format the non-compliance of the same does not indicate any consequence nor the circulars issued in that regard specifies any consequence for non compliance. The circular only indicates the ease with which the checking could be completed at the check posts. In that background when penalty is to be imposed for non-compliance of the requirement of production of the documents provided for in Section 75(3) and Rule 41(9) and when presumption of evasion of taxes is rebuttable by production of the documents the Authorities were required to apply their mind to this aspect of the matter. The documents as referred to by the petitioners in their reply dated 7.1.2014 were to be examined to find out as to whether the said documents were genuine and whether the documents were in existence as on the date of movement of the goods. In that regard if the authorities were satisfied that the documents in the physical form was available as on the date of the movement of the goods in such event a consideration was necessary to be made as to whether penalty was leviable only because the uploading in the electronic format was not done. In the instant case no such exercise has been done but the penalty has been imposed only on the observation that on-line declaration had not been made. Insofar as the tax levied at 50, 475/- in any event the same was required to be paid and the petitioner having paid the same has secured the release of the goods through interim order passed by this Court which has only stayed the recovery of penalty. In that circumstance it would be appropriate to set aside the orders dated 22.05.2014 and 30.05.2014 and remit the matter to the Superintendent of Taxes to take a decision at the outset and thereafter to enable the Inspector of Taxes to take a decision thereafter - petition allowed by way of remand.

Summary

Issues:
Challenge to seizure list under Rule 41 of Assam Value Added Tax Rules, 2005; Legality of circulars; Quashing of orders imposing tax and penalty.

Analysis:
The petitioner, a private limited company engaged in the sale of electronic goods, challenged the seizure list dated 10.12.2013 under Rule 41 of the Assam Value Added Tax Rules, 2005. The petitioner sought the declaration of sub-rule (5) of Rule 41 as ultra vires the Assam Value Added Tax Act, 2003, and the circulars dated 08.09.2011, 18.11.2011, 14.03.2012, 14.03.2012, and 18.05.2012 as illegal. The petitioner also contested the orders imposing tax and penalty by the Superintendent of Taxes and the Inspector of Taxes. The crux of the matter was the requirement of furnishing documents in electronic format, which the petitioner argued as sub-delegation and unsustainable. The respondents defended their actions citing non-compliance and the need for electronic format for verification.

The petitioner contended that sub-rule (5) of Rule 41 of the Rules 2005, allowing the Commissioner to direct electronic information, amounted to impermissible sub-delegation. Relying on legal precedents, the petitioner argued against such delegation. However, the court observed that the power to make rules under Section 106 of Act 2003 was vested in the Government, and Rule 2005 was framed accordingly. The court found the proviso empowering the Commissioner as a legitimate part of the Rule, not sub-delegation. The court distinguished the present case from the legal precedents cited by the petitioner.

The court delved into the specifics of the case, noting the petitioner's failure to upload documents in electronic format. The court scrutinized the seizure list, communication between parties, and orders of tax authorities. It highlighted the lack of detailed examination of physical documents and hasty imposition of penalties based solely on non-compliance with electronic format requirements. The court emphasized the need for authorities to consider the genuineness and availability of physical documents at the time of goods movement before penalizing for non-compliance with electronic format.

Consequently, the court set aside the orders imposing tax and penalty, remitting the matter to the Superintendent of Taxes for reconsideration. The court allowed the Inspector of Taxes to take further action in accordance with the law post the Superintendent's decision. The writ petition was partially allowed with no order as to costs.