2021 (7) TMI 993 - HC - VAT and Sales Tax

Validity of assessment order - assesses have not filed option letter for payment of tax under compounding scheme - discrepancies in the turnover - HELD THAT - This Court is of an opinion that the impugned order stipulates that regarding the difference in the turnover, the dealers have file Form WW and Profit and Trading and loss account for the Month of December 2014 only. At the time of filing Form WW, they have reported that the total sales turnover is ₹ 56,08,055/- in the Trading Account. At that time of inspection, they have not reconcile the above turnover before the Enforcement Officials. Now, they have stated that the correct turnover is ₹ 62,52,658/- only. But the trading account, they have reported the turnover is ₹ 56,08,055/- only. At that time personal hearing also, they have not reconcile how they have shown in the Trading Account - This Court is of an opinion that an adjudication is required with reference to the disputed facts. Discrepancies in the turnover - HELD THAT - Verification of records are required and the Appellate Authority is the final fact finding Authority regarding the adjudication of disputes. Therefore, preferring an appeal is preferable for the purpose of resolving the issues in a full-fledged manner. The practice of filing the Writ Petitions are in ascending mode without exhausting the appeal remedy mostly with an idea to avoid payment of pre-deposit for filing an appeal. Such a practice can never be encouraged. In all circumstances, the parties are bound to exhaust the appeal remedy in the manner prescribed. This being the principles settled by the Courts, this Court is of an opinion that such disputed questions raised in the Writ Petition cannot be decided by this Court based on the affidavit or based on the orders passed by this Court, holding that the option letters need not be submitted by the assessee. All these issues are to be decided on merits and with reference to the documents and evidences to be produced. The petitioner has to exhaust the Appellate remedy as contemplated under the provisions of the Act. Accordingly, the petitioner is at liberty to prefer an appeal in a prescribed format by applying the provisions of Statute and Rules, within a period of six weeks from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues Involved:
1. Validity of reassessment based on non-filing of option letter for tax under compounding scheme.
2. Discrepancies in turnover and the necessity for reconciliation.
3. Jurisdiction and procedural adherence by the Assessing Officer.
4. Exhaustion of appellate remedies before approaching the High Court.

Issue-Wise Detailed Analysis:

1. Validity of Reassessment Based on Non-Filing of Option Letter for Tax Under Compounding Scheme:
The petitioner challenged the reassessment orders, arguing that the non-filing of an option letter for tax payment under the compounding scheme should not be a criterion for reassessment. The petitioner referenced a previous High Court order dated 18.12.2017 in W.P.No.12556 of 2006, which held that the respondent committed an error in holding that the petitioner did not exercise his option. The petitioner contended that the Assessing Officer exceeded his jurisdiction by passing the impugned orders based on this ground.

2. Discrepancies in Turnover and the Necessity for Reconciliation:
The petitioner argued that the discrepancies in turnover were not properly verified by the respondents. The original returns filed by the petitioner regarding turnover were allegedly ignored, leading to a unilateral decision by the Assessing Officer. The respondents, however, maintained that the assessment orders were passed following proper procedures and considering discrepancies in the turnover reported in the monthly returns and the Trading Account/Form WW Return. The court noted that an adjudication was required regarding the disputed facts and that the Appellate Authority is the final fact-finding authority for such disputes.

3. Jurisdiction and Procedural Adherence by the Assessing Officer:
The respondents asserted that the assessment orders were not solely based on the Enforcement Directorate Officials' Report but also on discrepancies found in the turnover and other aspects. The respondents provided opportunities for the petitioner to submit books of accounts and reconcile figures, which the petitioner allegedly failed to do. The court opined that the petitioner had not availed the opportunities provided during the adjudication process and that approaching the court without exhausting appellate remedies was not encouraged.

4. Exhaustion of Appellate Remedies Before Approaching the High Court:
The court emphasized the importance of exhausting appellate remedies before filing a writ petition under Article 226 of the Constitution of India. The court stated that disputes regarding turnover, reconciliation, and tax determination should be resolved by the Appellate Authority, which is empowered to consider both factual and legal grounds. The court highlighted that entertaining writ petitions without exhausting appellate remedies undermines the institutional authority and legislative intention behind providing such remedies.

Conclusion:
The court concluded that the petitioner must exhaust the appellate remedy as provided under the Act. The petitioner was directed to file an appeal in the prescribed format within six weeks from the date of receipt of the court's order. The Appellate Authority was instructed to condone any delay, entertain the appeal, and dispose of it on merits in accordance with the law. The writ petitions were disposed of with these directions, and no costs were awarded.