2021 (9) TMI 56 - SCH - VAT and Sales Tax

Validity of SCN issued by competent authority under Rule 58 - violation of Section 70(5)(b) of Jharkhand Value Added Tax Act, 2005 - HELD THAT - After having said that the High Court ought to have kept the option to the competent authority open to issue a fresh show cause notice in conformity with the provisions of the Act and Rules concerning the subject matter of notice under Rule 58 for violation of Section 70(5)(b), which was set aside and thereafter the respondent would respond and contest the said proceedings. That liberty is not conferred by the High Court in the present case. Hence, to that extent, we need to modify the order of the High Court. The High Court having set aside the show cause notice should have given liberty to the competent authority to proceed with the matter in accordance with law afresh - Appeal allowed.

Summary

Issues:
Validity of show cause notice under Rule 58 for violation of Section 70(5)(b) of the Jharkhand Value Added Tax Act, 2005.

Analysis:
The Supreme Court addressed the appeal challenging the High Court's judgment quashing a show cause notice for violation of the Jharkhand Value Added Tax Act, 2005. The High Court found the notice to be non-conforming with the Act and Rules, leading to the setting aside of penalty orders and directions for refund if any amount was paid towards the demand. The Supreme Court agreed with the High Court's finding on the infirmity of the notice. However, it noted that the High Court failed to grant the competent authority the liberty to issue a fresh notice in compliance with the law. The Supreme Court emphasized the importance of allowing the authority to proceed afresh in such cases. It clarified that the High Court's decision was solely based on the validity of the notice and not on the merits of the case. The Supreme Court directed the competent authority to issue a fresh show cause notice within four weeks, continuing the action initiated under the previous notice. It kept all other legal contentions open for future proceedings. The Court clarified that it did not express any opinion on the case's merits and rejected the respondent's argument that the High Court had delved into the case's merits. The Court also mentioned that any amount deposited by the respondent during the proceedings would be subject to final orders for adjustment or payment accordingly. Ultimately, the Supreme Court partly allowed the appeal by modifying the High Court's judgment and order.

In conclusion, the Supreme Court's judgment focused on the procedural aspect of the case, specifically the validity of the show cause notice under the Jharkhand Value Added Tax Act, 2005. The Court upheld the High Court's decision regarding the non-conformity of the notice with the Act and Rules but emphasized the need to grant the competent authority the liberty to issue a fresh notice in compliance with the law. The judgment clarified that the High Court's decision was limited to the notice's validity and did not delve into the case's merits. The Court directed the competent authority to proceed with a fresh notice and kept all legal contentions open for future consideration.