2024 (6) TMI 998 - HC - VAT and Sales Tax

Violation of principles of natural justice - whether the Commercial Taxes Officer erred in affording reasonable opportunity of being heard to the petitioner-assessee and as such the initial order is vitiated in law and its affirmation by the Tax Board is also against the mandate of law? - HELD THAT - In the case on hand, it was not verified from the businessmen named in the Sauda Noon Register as to whether actually any transaction of sale has taken place nor any other satisfactory report/ evidence was there to substantiate case of tax evasion. Evidently the order of Assessing Officer suffers from arbitrariness and non-compliance of mandates of law in the matter of just opportunity of hearing. In KALRA GLUE FACTORY VERSUS SALES TAX TRIBUNAL AND OTHERS 1987 (3) TMI 110 - SUPREME COURT , Hon ble Apex Court upset the conclusion of Assessing Authority which was based on statement of a witness, who was not cross-examined. Coming to the facts of this case, it is evident that the Assessing Authority did not enquire about correctness of averments made in reply to the notice by the petitioner. In other words it was not verified that the entries in the Saudanoon Register were genuinely a sale transaction. A due enquiry might have given a different result and in absence of enquiry, correctness of the conclusion is not sustainable - The learned Tax Board has not considered this legal infirmity committed by the Assessing Authority while upsetting the reasoned order of the appellate court, therefore, the impugned order of Tax Board is fit to be set aside on this ground alone. Whether the judgment and order of Tax Board is sustainable in law for non-consideration of the reasons of the Appellate Authority, whose order was under challenge before the Tax Board? - HELD THAT - The Tax Board for the first time interpreted the abbreviation WB as without bills. This aspect was not touched by any of the Lower Authority including the Commercial Taxes Officer. The petitioner had interpreted the said abbreviation as delivery without bardan. The Tax Board has assumed without any precedent or supporting document or other reliable evidence that the abbreviation WB would be interpreted as without bill only and no other interpretation is acceptable - The initial order imposing tax, penalty etc., dated 23.03.1999 reveals that the Commercial Taxes Officer had asked the petitioner to deposit Rs. 5 Lacs for compounding. Later on the compounding failed. The Tax Board assumed that since the petitioner had deposited Rs. 5 Lacs, the petitioner admitted evasion of tax. It is evident that the impugned order and judgment of the Tax Board is bad in law, hence the same is set aside and the order of the Appellate Authority is affirmed - Revision allowed.

Summary

Issues Involved:
The judgment involves a Civil Tax Revision under Section 86 of the Rajasthan Sales Tax Act, 1994 challenging an order passed by the Tax Board, Ajmer. The main issues include assessment of tax, interest, and penalty against the petitioner under Section 29(7)(f) of the Act, the genuineness of transactions, the sufficiency of opportunity of being heard, and the consideration of reasons by the Appellate Authority.

Assessment of Tax, Interest, and Penalty:
The petitioner, a registered dealer engaged in manufacturing and trading, was alleged to have concealed transactions to evade taxation based on a survey conducted by the respondent Authority. The petitioner disputed the findings, arguing that the survey report lacked credibility as it was unsigned and the "Sauda Noon Register" did not necessarily indicate sales or purchases. The petitioner contended that without direct evidence of sales, no tax liability should arise. The Court considered whether the assessing authority erred in providing a reasonable opportunity for the petitioner to be heard and whether the order was sustainable under law.

Sufficiency of Opportunity of Being Heard:
The petitioner argued that the assessing authority failed to conduct a proper inquiry into the petitioner's defense, leading to an arbitrary imposition of fines based on suspicion rather than legal proof. Citing legal precedents, the petitioner emphasized the importance of establishing charges through concrete evidence and proper verification of transactions. The Court noted that the assessing authority did not verify the entries in the "Sauda Noon Register" to confirm the genuineness of sales transactions, highlighting a lack of due diligence in the assessment process.

Consideration of Reasons by the Appellate Authority:
The Court questioned whether the Tax Board adequately considered the reasons provided by the Appellate Authority in its decision-making process. It was established that the Tax Board did not address the rationale behind the Appellate Authority's order, which is a legal requirement when overturning a lower authority's decision. Failure to engage with the Appellate Authority's reasons rendered the Tax Board's judgment unsustainable in law, emphasizing the necessity of providing clear justifications for interference with lower authority orders.

Conclusion:
The judgment set aside the impugned order of the Tax Board, affirming the decision of the Appellate Authority. The Court found legal infirmities in the assessing authority's actions, emphasizing the importance of proper verification and due diligence in tax assessments. The Tax Board's failure to consider the Appellate Authority's reasons and its arbitrary interpretations led to the decision to quash the impugned order. The petitioner was directed to pay certain amounts for using loose paper instead of a bound register, with the revision ultimately being allowed in favor of the petitioner.