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2014 (4) TMI 732 - HC - VAT and Sales TaxRate of royalty - Royalty on consumption/removal of minerals u/s 9 of the Mines and Minerals (Development and Regulation) Act, 1957 - Proper Notice - Quashment of Demand Notice - Vires of Rule 64D of the Mineral Concession Rules, 1960 Held that - When it was found that the sale price as disclosed by the assessee and the data supplied by the Department of Mines, Chaibasa were not in conformity with each other and the assessee had intentionally paid less VAT by showing lesser sale price, AO proceeded to assess the value of goods and consequently tax and penalty u/s 35(7) and 40(2) respectively - A separate notice under u/ 35(7) was not required to be issued as it was in continuation to the proceeding under the regular assessment proceeding u/s 35 (5) of the Act. Issuance of Fresh Notice - Sufficiency of Opportunity of hearing Judgment in J.K. Steel Ltd. v. Union of India 1968 (10) TMI 45 - SUPREME COURT OF INDIA followed - If the exercise of power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question - Incorrect mentioning of the provision of law or even if it is not indicated in the notice issued to the assessee that AO has proceeded u/s 35(7), it would not prejudice the assessee as from the materials on record it is evident that AO has recorded reasons for proceeding against the assessee and thus, the assessee knew as to the nature of the proceeding and the demand raised by AO - From the proceeding before the Assessing Officer, it is clear that sufficient opportunity was given to Assessee - The petitioner was heard by AO - There was not required in law for issuing fresh notices u/s 35(7) and 40(2) to the assessee and therefore, held that impugned order dated 11.02.2013 has not been passed in violation of the principles of natural justice. Availability of remedy of Appeal/Review/ Revision Held that - Judgment in Asstt. Collector of Central Excise v. Dunlop India Ltd. 1984 (11) TMI 63 - SUPREME Court followed - the Hon ble Supreme Court has observed that Article 226 is not meant to short circuit or circumvent statutory procedures Since JVAT Act, 2005 provides an effective remedy of appeal, these writ petitions cannot be entertained by this Court and accordingly, the writ petitions are dismissed No opinion is expressed on the merits of the case - Decided against Assessee.
Issues Involved:
1. Quashing of Notification dated 10.12.2009 substituting Rule 64D of the Mineral Concession Rules, 1960. 2. Quashing of demand notices and orders for VAT recovery for 2010-11 and 2011-12. 3. Authority of the Central Government to fix the sale price of Mineral Iron Ore. 4. Levy of VAT based on actual sale price versus hypothetical price. 5. Alleged violation of principles of natural justice in the assessment proceedings. Detailed Analysis: 1. Quashing of Notification dated 10.12.2009: The petitioner sought the quashing of the Notification dated 10.12.2009, which substituted Rule 64D of the Mineral Concession Rules, 1960, claiming it was ultra vires to the Constitution of India and the Mines and Minerals (Development and Regulation) Act, 1957. However, during the course of arguments, the petitioner did not press this prayer and confined the argument to the question of violation of principles of natural justice. 2. Quashing of Demand Notices and Orders for VAT Recovery: The petitioner challenged the demand notices and orders for VAT recovery for the assessment years 2010-11 and 2011-12, arguing that the assessments were arbitrary and based on an assumed sale price fixed by the Indian Bureau of Mines. The petitioner contended that the actual sale price should be considered for VAT calculation, not the hypothetical price determined by the Bureau. 3. Authority of the Central Government to Fix Sale Price of Mineral Iron Ore: The petitioner argued that the Central Government had no authority to fix the sale price of Mineral Iron Ore, which is a de-controlled commodity. The sale price should depend on market conditions and not be fixed arbitrarily by any authority. The petitioner asserted that the Mines and Minerals (Development and Regulation) Act, 1957, does not empower any authority to fix the sale price of minerals. 4. Levy of VAT Based on Actual Sale Price versus Hypothetical Price: The petitioner contended that VAT should be levied on the actual sale price, which is the valuable consideration for the transfer of property in goods, and not on any hypothetical or assumed price. The petitioner claimed that the Commercial Taxes Department of Jharkhand arbitrarily took the sale price notified by the Indian Bureau of Mines for VAT calculation, which was not the actual sale price of the petitioner's iron ore. 5. Alleged Violation of Principles of Natural Justice: The petitioner argued that the assessment orders were passed without proper notice and opportunity of hearing, violating the principles of natural justice. The petitioner highlighted that the Assessing Officer did not issue a fresh notice under Section 35(7) of the Jharkhand Value Added Tax Act, 2005, before passing the order. The petitioner also claimed that the Assessing Officer ignored their request for an adjournment and proceeded to pass the final order arbitrarily. Court's Findings: - Opportunity of Hearing: The court found that the petitioner was given sufficient opportunity of hearing. The proceedings before the Assessing Officer included multiple dates where the petitioner either appeared or sought adjournments. The court noted that the petitioner deliberately delayed the proceedings. - Requirement of Fresh Notice: The court held that a separate notice under Section 35(7) was not required as the assessment under Section 35(5) was already in progress. The court emphasized that the provision under Section 35(7) mandates only a reasonable opportunity of hearing, which was provided in this case. - Principles of Natural Justice: The court concluded that there was no violation of the principles of natural justice. The petitioner was aware of the nature of the proceedings and the demand raised by the Assessing Officer. The court noted that the Assessing Officer recorded reasons for proceeding under Section 35(7) and Section 40(2) of the Act. - Alternative Remedy: The court highlighted that the Jharkhand Value Added Tax Act, 2005, provides an effective remedy of appeal. The court dismissed the writ petitions, directing the petitioner to approach the appellate authority within four weeks if advised, failing which the respondent could proceed against the petitioner in accordance with law. Conclusion: The court dismissed the writ petitions, holding that the assessment orders were not passed in violation of the principles of natural justice and that the petitioner had an effective remedy of appeal under the Jharkhand Value Added Tax Act, 2005. The court granted liberty to the petitioner to move the appellate authority within four weeks.
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