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TMI Blog2014 (5) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahalaxmi Cotton (supra) where it was made clear that envisaged modalities were not to apply to transactions by dealers where the certificate/invoice is not genuine (including hawala transactions), no set-off should be granted to the dealer claiming to be a purchaser - The assessee cannot possibly assert that its assessment in accordance with law must be deferred until an assessment is carried out in the first instance against hawala dealers - The assessee has no case whatsoever to make such an assertion - The State is justified in taking necessary steps to complete the assessment in accordance with law – The court is satisfied from the disclosures made by the Government in the affidavits that steps are being taken by the State for pursuing the remedies lawfully open even against the hawala dealers - A web of complex transactions has been put into place to defraud the revenue and in the course of this judgement, it is not intended to circumscribe in any manner whatsoever the full range of powers vested in the State Government through its Department for ensuring that due steps are taken to curb or as the case may be deal with hawala transactions which pose a serious threat to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Petitioner. 2. The Sales Tax Department filed a complaint with the Economic Offences Wing of the Crime Branch of the C.I.D. on 16 April, 2012 alleging that the Petitioner and its Directors had obtained false bills from hawala dealers and claimed set-off resulting in a loss of revenue of ₹ 77.28 lakhs for 2008-09 and ₹ 44.86 lakhs for 2009-10. On the web-site of the Sales Tax Department, a list was put up on 12 July 2012 of beneficiary dealers against whom police complaints were lodged after 1 April 2011. The claim of the Petitioner appears as a beneficiary at sr. no.17 of that list. 3. The contention of the Petitioner is that an F.I.R. was filed against the Petitioner on 22 October 2012. Hence, it is alleged that the name of the Petitioner was uploaded on the web-site on 12 July 2012 even prior to the filing of the F.I.R. Moreover, according to the Petitioner, there was no basis to initiate proceedings under Section 73 of the MVAT Act, 2002 by publication on the website, when the assessment was pending. Finally, it has been urged on behalf of the Petitioner that it is the duty of the Revenue to pursue the hawala dealers who have collected tax. 4. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also empowered to publish any other particulars relating to any proceedings under the Act in respect of such dealers and persons. The publication by the State on the web-site in the case of the Petitioner is to the effect that the Petitioner has been the beneficiary of a hawala transaction. During the course of the hearing of these proceedings, it is not in dispute that at least seven of the 34 vendors whose invoices were relied upon by the Petitioner to claim input tax credit are bogus entities. As a matter of fact, there were no deliveries of goods or actual sales and bogus invoices were raised to get input tax credit. The publication by the State on the web-site falls within the enabling provisions of Section 73(1). The publication on the web-site is a cautionary exercise. It does not cast a stigma. The caution puts dealers on a guard, including in particular those genuine dealers also who should safeguard their position. In the present case, the State in its additional affidavit has explained that the investigating authorities had already been moved, on the basis of the material with the Department before the publication on the web-site was uploaded. The action of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Treasury either by not filing their returns at all or by filing returns but not paying the full tax due (i.e. short filing ) or where returns are filed but sales to the concerned dealers are not shown (i.e. undisclosed sales ). (2) Set-off will be denied to dealers where at any stage in the chain of sales a tax invoice/certificate by a defaulter is or has been relied on : (a) In the event of no returns having been filed by the defaulter, the dealers will be denied the corresponding set-off; (b) In the case of short filing, dealers who have purchased from the defaulter will be granted set-off pro rata to the tax paid; (c) In the case of undisclosed sales, the dealers will be denied the entire amount being claimed as set off in relation to the undisclosed sale; (d) To prevent a cascading effect, the tax will be recovered only once. As far as possible, the Sales Tax Department will recover the tax from the dealer who purchases from the defaulter. However, the Sales Tax Department will retain the option of denying a set-off and of pursuing all selling dealers in the chain until recovery is ultimately made from any one of them. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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