2018 (11) TMI 450 - HC - VAT and Sales Tax

Sales Tax Practitioner cum Advocate - Disqualification u/s 81(2) of the Tax Act - allegation that appellant has committed misconduct - sole contention of petitioner is that such a notice could not have been issued to the petitioner when the petitioner was acting as a legal practitioner, having acquired a degree of LLB and being enrolled with the Bar Council of Gujarat on 10.08.1983. Held that - Reading of Section 81 of the Act suggests that a person who is entitled or required to attend before any authority in connection with any proceedings under the Act can be of three categories namely (I) a person can be authorised in writing to appear before such authority (II) a Legal Practitioner or a Chartered Accountant or a Cost Accountant or (III) a Sales Tax Practitioner who possesses the prescribed qualification entered in the list. The term legal practitioner would include an advocate. Reading of Section 81(1) of the Act therefore makes it clear that an individual can appear before an authority in either of the capacities including one being a sales tax practitioner or a legal practitioner. The annexures to the show cause notice clearly suggest that the petitioner appeared before such authorities in the capacity of a legal practitioner and not as a sales tax practitioner. Sub-section 81(2) of the Act provides that whenever a legal practitioner or any other professional namely a Chartered Accountant or a Cost Accountant is found guilty of misconduct with any proceeding under the VAT Act, the authority empowered to take disciplinary action is the authority to which the members of the profession belong to. (emphasis supplied) Admittedly, the petitioner is a legal practitioner and therefore the domain to conduct any investigation or issue a show cause notice would be that of the State Bar Council. Section 35 of the Advocates Act 1961 clearly provides that it is the State Bar Council which has the power to take disciplinary proceedings for any professional and/or any other misconduct against an advocate - It is therefore evident that a sales tax practitioner and a legal practitioner are distinct individual professionals and it is in this context that a segregation is made in Section 81(1) of the Act authorising each individual to appear in his respective capacity. Therefore, if a legal practitioner is to be proceeded against for any misconduct under the proceedings under the VAT Act, sub-section (2) of Section 81 of the Act makes it clear that such disciplinary proceedings have to be taken by the authority to which the member of such profession belongs to. Once, the petitioner acquired the certificate of a legal practitioner by obtaining a licence on 10.08.1983, such a qualification supersedes the certificate of a sales tax practitioner and cloak of being a legal practitioner takes over and the petitioner loses his identity of a sales tax practitioner. The case therefore does not fall within clause (c) of sub-section (1) of Section 81 of the Act - the impugned show cause notice deserves to be quashed - petition allowed.

Summary

Issues Involved:
1. Authority of the Commissioner under Section 81(2) of the Gujarat Value Added Tax Act, 2003 (GVAT Act) to disqualify a legal practitioner.
2. Jurisdiction of the Commissioner to issue a show-cause notice to a legal practitioner.
3. Distinction between a sales tax practitioner and a legal practitioner under the GVAT Act.

Issue-wise Detailed Analysis:

1. Authority of the Commissioner under Section 81(2) of the GVAT Act:
The petitioner argued that the Commissioner is only empowered to disqualify a legal practitioner found guilty of misconduct by an authority empowered to take disciplinary action against members of the legal profession, which in this case would be the Bar Council of Gujarat. The petitioner, having been enrolled with the Bar Council of Gujarat since 1983, contended that the Commissioner lacked the authority to disqualify him as he was acting as a legal practitioner and not as a sales tax practitioner.

2. Jurisdiction of the Commissioner to issue a show-cause notice to a legal practitioner:
The petitioner challenged the show-cause notice issued by the Joint Commissioner of Commercial Tax on the grounds that it was without jurisdiction. The court noted that the petitioner was initially registered as a sales tax practitioner but later became a legal practitioner. The court emphasized that under Section 81(2) of the GVAT Act, the Commissioner can disqualify a legal practitioner only if found guilty of misconduct by the relevant professional authority, which in this case is the Bar Council of Gujarat. Therefore, the Commissioner did not have jurisdiction to issue the show-cause notice to the petitioner, who was acting in his capacity as a legal practitioner.

3. Distinction between a sales tax practitioner and a legal practitioner under the GVAT Act:
The court highlighted that Section 81(1) of the GVAT Act distinguishes between a legal practitioner and a sales tax practitioner. The petitioner, having acquired the qualification of a legal practitioner, was acting under clause (b) of sub-section (1) of Section 81, and not under clause (c) as a sales tax practitioner. The court further noted that once the petitioner obtained his legal practitioner certificate, it superseded his earlier registration as a sales tax practitioner. Therefore, any disciplinary action for misconduct should be initiated by the Bar Council of Gujarat and not by the Commissioner.

Conclusion:
The court concluded that the show-cause notice issued by the Commissioner was without jurisdiction and quashed it. The court emphasized that the petitioner, being a legal practitioner, falls under the jurisdiction of the Bar Council of Gujarat for any disciplinary proceedings. The petition was allowed, and the rule was made absolute.