2013 (11) TMI 804 - HC - VAT and Sales Tax

Tax Evasion - no evidence was produced by the assessee inspite of allowing time to produce the record, and on the basis of this, the Assessing Officer had passed the assessment order reiterating the earlier assessment order - Held that - While as per the remand order, the Assessing Officer was required to frame a fresh assessment order after complying the remand order passed by the Revisional Authority, but it appears that mechanically assessment order was passed by the Assessing Officer. When remand order was very specific in respect of certain directions, then those points ought to have been considered by the Assessing Officer even without production of any material by the assessee. The Assessing Officer ought to have recorded a fresh finding that there was tax evasion by the petitioner, on the basis of some material and documentary evidence tax evasion was found proved. But, in the Assessment Order and Revisional Order we do not find any such finding while it was necessary for the Assessing Officer and Revisional Authority to record such findings. From the perusal of the impugned order, it is find that after narration of the facts, the Revisional Authority because of non-production of any material before it by the petitioners reiterated the earlier order only, while as per directions issued by the Revisional Authority the Assessing Authority was under an obligation to meet out all the directions, but it appears that the Assessing Officer impressed with the fact that no evidence was produced before it by the assessee reiterated the earlier order, while it was under an obligation to decide the matter as directed by the Revisional Authority. When the important and vital issues are not considered by the Assessing Officer, the assessment order after remand cannot be sustained under the law - Matter remitted back to Assessing Officer to comply with the remand order - Following decision of M/s Shri Sharda Domestic Fuels Pvt. Ltd. Versus State of M. P. and others 2013 (4) TMI 464 - MADHYA PRADESH HIGH COURT - Decided in favour of assessee.

Issues Involved:
1. Legality of the task force's constitution and its report.
2. Petitioner's engagement in manufacturing of coal briquettes.
3. Denial of tax exemptions based on the task force's findings.
4. Validity of the assessment and revision orders.
5. Petitioner's eligibility for tax exemption as per the eligibility certificate.

Detailed Analysis:

1. Legality of the Task Force's Constitution and Its Report:

The petitioner challenged the constitution of the task force, claiming it was illegal and its report was biased and devoid of available facts and evidence. The court examined the findings of the task force, which had conducted an inspection and concluded that the petitioner was engaged in trading coal rather than manufacturing coal briquettes, thereby evading tax. The court referenced the Division Bench judgment in *Shri Sharda Domestic Fuels Pvt. Ltd. vs. State of M.P.*, where similar issues were raised. It was noted that the task force's report in the Sharda case was found to be non-speaking and lacking supporting documentary evidence.

2. Petitioner's Engagement in Manufacturing of Coal Briquettes:

The petitioner asserted that their industrial unit was engaged in the manufacturing of coal briquettes and had been carrying on this business since 1995. They were granted a certificate of registration and tax exemption for being a new unit. The court considered the petitioner's claim and the evidence provided, including the registration certificate and inspection reports from various authorities that certified the unit's functionality.

3. Denial of Tax Exemptions Based on the Task Force's Findings:

The task force's inspection note concluded that the petitioner was trading coal in the open market, thus evading tax. This led to the cancellation of the petitioner's tax exemption. The court, referencing the Sharda case, noted that the task force's findings were not supported by proper evidence and that the petitioner was not given an opportunity to explain or rebut the allegations. The court emphasized the need for a speaking order based on sound reasoning and proper evidence collection.

4. Validity of the Assessment and Revision Orders:

The petitioner sought to quash the assessment and revision orders passed by the respondents. The court reviewed the procedural aspects of the assessment and revision processes. In the Sharda case, it was found that the assessment orders were not speaking orders and were based on a format prepared by a computer without proper consideration of the evidence. The court directed that a fresh assessment be conducted with due opportunity for the petitioner to present their case and evidence.

5. Petitioner's Eligibility for Tax Exemption as per the Eligibility Certificate:

The petitioner argued that they were eligible for tax exemption as per the eligibility certificate granted to them. The court, considering the Sharda case, directed that the eligibility for tax exemption should be reassessed with proper verification of sales and production activities. The court highlighted that the burden of proof was on the department to establish tax evasion and that the petitioner should be given a fair chance to rebut the allegations.

Conclusion:

The court disposed of all the petitions with directions to the assessing officer to conduct a fresh assessment in compliance with the remand order from the Sharda case. The assessing officer was instructed to extend an opportunity to the petitioner to submit their explanation and evidence, and to pass a speaking order based on sound reasoning and proper evidence collection. The court emphasized the need for procedural fairness and adherence to legal standards in the assessment process. All petitions were disposed of with no order as to costs.

← Previous Next →