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TMI Blog2008 (7) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of section 39 of the Act and not by any other mode or means. In such circumstances, it is obvious that the issue of the so-called notice under section 79 read with section 82 of the Act is not proper use of the power under the Act . Thus the proposition notice bearing No. JCCT/INT/Assistant Commissioner-XII/INS-49/06-07 dated April 9, 2007 (copy at annexure E) issued by the third respondent alone is quashed by issue of a writ of certiorari. Writ petition allowed in part. - Writ Petition No. 10721 of 2007 - - - Dated:- 3-7-2008 - SHYLENDRA KUMAR D.V. , J. ORDER:- D.V. SHYLENDRA KUMAR J. The writ petitioner is a trust owning certain properties which it appears it is developing for putting up certain structures. It is claimed that the buildings constructed in the form of flats are being sold to the members or the beneficiaries of the petitioner-trust. It is in the context of this activity that the petitioner appears to have filed a nil return of liability under the provisions of the Karnataka Value Added Tax Act, 2003 (for short, the Act ) for the months October, November and December, 2006. The controversy in the writ petition relates to filing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,30,09,919 and after providing for necessary deductions, the tax liability works out to sum of Rs. 82,34,299; that the petitioner having failed to pay this amount and having failed to file true and proper return and that being an attempt to evade payment of tax, proposed to launch prosecution against the petitioner, but gave an option in terms of section 82 of the Act to enable the petitioner to compound the offence in terms of section 82 of the Act which reads as under: 82. Compounding offences (1) Where any dealer has committed an offence under sub-section (1) of section 77 or section 79, the prescribed authority may, on admission by such dealer in writing and upon his option to compound at any time prior to the commencement of the court proceedings relating thereto, compound such offence and order the dealer to pay such sum of money as specified by the prescribed authority, which shall not exceed the amount of the fine prescribed for the offence, in addition to any tax and interest due. (2) Furnishing of a cheque or any other instrument towards payment of a sum by any such dealer shall be deemed to be an application for compounding the offence. (3) Where the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC 298 is not applicable, nevertheless, the advance ruling authority has opined it is applicable and it is based on this clarification the authorities are now rushing to launch prosecution against the petitioner and therefore submitted that the advance ruling given by the authority in terms of annexure D also deserves to be quashed. The last contention is that annexure E proposition notice to launch prosecution is not valid in law; that there is no determined tax liability by any competent authority determining the tax liability for non-payment or evasion of which, prosecution could have been launched; that the authority who has indicated the amount as liability in the so-called show-cause notice at annexure E is not the competent authority to determine the liability assuming that there is if any on the part of the petitioner for the period in question, the determination and quantification can only be done by the competent authority that too in the proceedings under section 39 of the Act and not in a proceedings either under section 79 or section 82 of the Act. Countering such submissions, Smt. Niloufer Akbar, learned Additional Government Advocate would submit that the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf, it can be so examined. While Smt Vani, learned counsel for the petitioner, is right in submitting that even before a proper determination and quantification of the liability assuming that the petitioner is liable is made, it is not open for the authorities to issue the proposition notice as under section 79 or 82 of the Act. The show-cause notice at annexure E itself indicates that the assessee had filed nil return for the periods in question. If a nil return is filed, it is open to the assessing authority to examine that return. But, once the return is filed in terms of section 35, it is taken to be a deemed assessment on the return unless in terms of section 38(1) of the Act, which reads as under: 38. Assessment of tax (1) Every dealer shall be deemed to have been assessed to tax based on the return filed by him under section 35, except in cases where the Commissioner may notify the dealer of any requirement of production of accounts before the prescribed authority in support of a return filed for any period and such authority shall proceed to assess such dealer (a) on the basis of the return filed where he is satisfied that the return filed is correct and complete, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questioned in any criminal court in any prosecution or other proceeding, whether under this Act or otherwise. a dealer against whom prosecution proceedings are initiated cannot question the validity or legality of the order of assessments for non-compliance with which prosecution is being launched. Correctness of the order can only be questioned in an appeal as provided under the Act. The criminal court is also not enabled to either set aside or modify the assessments as expressly provided in section 85 of the Act. The compounding of offence in terms of section 82 of the Act is by admitting the tax liability and in addition to discharging the tax liability, by paying an amount as specified by the prescribed authority not exceeding the amount of fine prescribed for the offence. To compound the offence the assessee should know what exactly is the tax liability and the sum of the money which is specified by the prescribed authority in lieu of fine which again is linked to the amount of tax sought to be evaded fraudulently as under section 79 of the Act. Therefore, unless the actual amount of tax which is evaded or sought to be evaded fraudulently has been determined by the compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner is disputing the tax liability. In such an event, it is more appropriate that the competent authority first determines the tax liability and takes up further action in accordance with the statutory provisions. It is for this reason, the proposition notice bearing No. JCCT/INT/Assistant Commissioner-XII/INS-49/06-07 dated April 9, 2007 (copy at annexure E) issued by the third respondent alone is quashed by issue of a writ of certiorari and in all other respects the authorities are free to proceed against the petitioner in accordance with law for determining the tax liability and on the basis of the law as declared by the Supreme Court and as has been noticed and held to be applicable in the similar facts and circumstances in Larsen Toubro Limited's case in Writ Appeal No. 1409 of 2007. The advance ruling clarifying the applicability of the ratio of the judgment of the Supreme Court in Raheja's case [2005] 141 STC 298 is in consonance with the judgment of this court in Writ Appeal No. 1409 of 2007See [2008] 17 VST 457. and does not call for any interference. But, whether the petitioner's case is also similar and identical with the facts of the case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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