2023 (6) TMI 895 - HC - VAT and Sales Tax

Violation of principles of natural justice - opportunity for cross-examining the driver of the lorry not provided - Validity of assessment order and penalty - attempt to fraudulently bring goods into the State - HELD THAT - The specific contention of the petitioner that he had not been given a reasonable opportunity to prove that the transactions were fraudulent in nature and that the consignments were not intended and did not reach him requires consideration - the contention of the respondent that an opportunity to cross-examine the driver of the vehicle would not be practical in the circumstances, is accepted. The petitioner was entitled to be granted reasonable opportunity to substantiate his contention that the consignments were not intended for delivery to him. It is clear from the orders of assessment that the contention of the petitioner that interstate purchase had not been effected by him and that he has to be granted an opportunity to rebut the allegations levelled against him has been rejected largely relying on Section 9 of the KVAT Act stating that the burden of proving that any transaction of a dealer is not liable to tax under the Act shall lie on the dealer. Reasonable opportunity as provided in the statute has to be a full and proper opportunity to the dealer not only to raise his contentions, but also to make available and rely on material which would support his contentions - In the instant case, the petitioner had relied on a letter dated 28.7.2012 by which he had informed the authorities that there was an attempt to misuse his TIN for bringing in consignments into the State. It is to be noted that it was only from 1st February, 2012 that the electronic filing of declaration in Form 8F had been made mandatory. The assessment years are 2011-12, 2012-13, 2013-14. In the facts and circumstances of the instant case, the petitioner ought to have been given a full and proper opportunity to substantiate his contention that the consignments which passed the check posts purportedly in the name of the petitioner were actually not intended for delivery to the petitioner. The assessment completed and the penalty imposed without giving such an opportunity to the petitioner is, therefore, unsustainable for want of a reasonable opportunity being granted to substantiate his case. The impugned orders are set aside. There will be a direction to the respondents to give the petitioner a reasonable opportunity to place on record any material to show that the consignments were not intended for him or that the consignments did not reach the petitioner - Petition allowed.

Summary

Issues:
Challenging assessment and penalty orders for the assessment years 2011-2012, 2012-2013, and 2013-2014 based on alleged fraudulent activities and misuse of TIN number.

Assessment and Penalty Orders (2011-2014):
The petitioner, a dealer in M sand and rock powder, contested assessment and penalty orders for the mentioned years, claiming no interstate purchases were made and that his TIN number was misused for transporting goods. Despite the petitioner's complaints and requests for verification, the assessment officer, relying on Section 9 of the KVAT Act, rejected the petitioner's explanations, completed assessments based on online data, and imposed penalties.

Contentions and Legal Burden:
The petitioner raised concerns of fraudulent activities misusing his TIN number, requesting specific authorizations for consignments. The Government Pleader argued that the burden of proof lies with the dealer, emphasizing electronic filing requirements and check post declarations. The authorities cited relevant KVAT Act sections and rules to support their position.

Vigilance Bureau Raid and Evidence:
The Vigilance and Anti-corruption Bureau's raid revealed discrepancies in bill numbers and suggested tax evasion through parallel billing practices by the petitioner, further complicating the case against him.

Judicial Review and Opportunity for Defense:
The court considered the petitioner's claims of lack of opportunity to prove fraudulent transactions and the necessity for a fair chance to present evidence. While acknowledging the burden of proof on the dealer, the court highlighted the importance of a reasonable opportunity for the petitioner to substantiate his claims, especially regarding consignments not intended for him.

Court Decision and Directions:
In light of the above, the court set aside the impugned orders, directing the authorities to provide the petitioner with a fair opportunity to present evidence supporting his case within three months. The judgment emphasized the need for a full and proper chance for the petitioner to demonstrate that the consignments in question were not intended for him, ensuring a just and thorough review of the matter.