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TMI Blog2019 (11) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... as not used any explanation like daily entry of transaction. The Tribunal has committed a blunder in as much as instead of the word retailer used the word dealer . This is a mistake of fact committed by the Tribunal and its findings on the incorrect provision of law which is not applicable in the case of the petitioner. There are no discrepancies in accounts maintained by the petitioner and accounts were accepted by the authorities and this aspect would be an important factor in holding that earlier proceedings under Section 70 (5) (b) were bad in law - It would be evident from the facts and documents available on records that the allegation is not that the original documents were not and are unaccounted goods, rather the allegation is that the entries on daily basis was not made in the books of accounts. In the instant case, notice was issued to the Writ petitioner, but no reason, whatsoever, in relation to penalty under Section 70 (5) (b), worth name was given so as to enable the petitioner to file its show cause. In other words, the notice was not in terms of Rule 58 and contention of the State that gist of allegation was provided in the inspection report cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner s appeal against the penalty order has been dismissed and the order of penalty under Section 70(5)(b) of Jharkhand Value Added Tax Act, 2005 has been confirmed; (c) For quashing the Order dated 26.05.2010 (Annexure-6) by which the assessing authority has imposed penalty of ₹ 58,78,944/- under Section 70(5)(b) of Jharkhand Value Added Tax Act 2005 on the Petitioner; (d) And also for quashing the demand notice dated 26.05.2010 (Annexure-7) raised pursuant to the aforesaid orders. 2. The facts of the case lie in a short compass. A team of officers of the Commercial Taxes Department made an inspection of the petitioner s factory on 13.05.2010 and prepared an inspection report in which, besides other allegations at page-4 of the inspection report, it was stated that the entries in the books of account of the goods purchased in the year 2010-11 namely the raw materials, iron ores, coal and dolomite have not been made and consequently the goods were seized under the provisions of Section 70(5)(a) of the JVAT Act 2005. Proceeding was also initiated under Section 40(2) of the JVAT Act 2005, but in the present case, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harkhand High Court as well as of the Hon ble Supreme Court of India hold that findings of the appellate authorities cannot be sustained and ultimately the order of penalty under Section 40 (2) was set aside. However, the learned Tribunal sustained the order of penalty passed under Section 70 (5) (b) of the JVAT Act 2005, which has been challenged by the petitioner in the instant writ application. 3. The learned senior counsel for the petitioner submits that from perusal of the first part and last part of the show-cause notice dated 13.05.10, the following things are evident: (a) No reasons at all has been assigned for issuance of notice under Section 70(5)(b); (b) No satisfaction of the authorities has been recorded for imposition of penalty under Section 70 (5) (b); (c) No gist of accusations has been given in the said notice as required under Rule 58 of the JVAT Rules, 2006. 4. In this context, learned senior counsel referred to Rule 58 (1) of the JVAT Rules, 2006, which is quoted herein below: 58. Opportunity of Hearing- (1) The authority referred to in Rule 57 shall, in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed notice issued prior to the finalisation of the classification cannot be taken note as show-cause notices for the recovery of demand, and we are in agreement with the said findings of the two members of the Tribunal. This is because of the fact that issuance of a show-cause notice in a particular format is a mandatory requirement of law. The law requires the said notice to be issued under a specific provision of law and not as a correspondence or part of an order. The said notice must also indicate the amount demanded and call upon the assessee to show cause if he has any objection to such demand. The said notice also will have to be served on the assessee within the said period which is either 6 months or 5 year as the facts demand. Therefore, it will be futile to contend that each and every communication or order could be construed as a show-cause notice. For this reason, the above argument of the Revenue must fail. 6. Placing reliance on the above judgment, the learned senior counsel further submits that show-cause notice as required under law has not been issued by the revenue. Other documents cannot be construed as show cause notice by the authority. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled the returns by the scheduled date i.e. on 25.05.2010 for the month of April 2010. The return has been annexed in the writ application. This return was filed on 25.05.2010 which included all the documents, the details of all the purchases of raw materials (both within the State and outside State), the relevant accounts and the details of all sales (both within the State and outside State). However, the assessing officer and later on the appellate authority as well as the Tribunal totally ignored the returns filed by the petitioner. The learned senior counsel further referred Section 70(5)(b) of the JVAT Act, which is quoted herein below: 70 (5) (b) The Prescribed Authority shall, in a case where the dealer or the person in-charge of goods as mentioned in Clause (a) fails to produce any evidence or fails to satisfy the said authority regarding the proper accounting of goods, impose a penalty, after allowing an opportunity of hearing in the prescribed manner to the dealer or such person, which shall be equal to three times the amount of tax calculated on the value of such goods and the goods shall be released as soon as the penalty is paid. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that original documents were not placed before the Tribunal as stated in page-14 of the impugned order. By refuting the contention of the petitioner in respect of the assessment order passed by the same authority, wherein it was stated that nothing wrong was found for the said assessment year, learned counsel submits that the assessment order has got nothing to do with the proceedings under Section 70(5)(b). 14. Having heard learned counsels for the parties and perusing the materials available on record, it appears that the learned Tribunal has dismissed the revision application holding as under: (i) In the result the order dated 24.12.2010 of learned DCCT and the appellate order dated 3.6.2013 of learned JCCT (Appeal) as u/s 40 (2) JVAT are hereby set aside. The matter is remanded to the learned DCCT or his successor to pass a fresh order after hearing the parties and after making required enquiry. In so far as the order dated 26.5.2010 of learned DCCT and appellate order dated 3.6.2013 of learned JCCT (Appeal) as passed u/s 70(5)(b) are concerned, they are affirmed. (ii) Accordingly the revision petition bearing no. JR 128 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispatches and closing stock of different finished goods 16. From bare reading of the above Rule, it is evident that Rule 38(2) (i) deals with retailers and not with manufacturers which the petitioner in this case is and though the said rule deals with daily takings. Rule 38(2)(r) deals with stock records, but no period is mentioned therein particularly daily maintenance of accounts. Rule 38(6) deals with manufacturers which speak of maintaining month wise accounts. 17. The Tribunal dealt with the fact that on 24.05.2010, the monthly abstract purchases April-2010 has been mentioned and also recorded the petitioner s contention that legislature has not used any explanation like daily entry of transaction. 18. The Tribunal has committed a blunder in as much as instead of the word retailer used the word dealer . This is a mistake of fact committed by the Tribunal and its findings on the incorrect provision of law which is not applicable in the case of the petitioner. 19. The Tribunal has further erred in holding that no documents in relation to purchases has been filed and has further stated that even before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. From the above, it is evident that there are no discrepancies in accounts maintained by the petitioner and accounts were accepted by the authorities and this aspect would be an important factor in holding that earlier proceedings under Section 70 (5) (b) were bad in law. 26. It would be evident from the facts and documents available on records that the allegation is not that the original documents were not and are unaccounted goods, rather the allegation is that the entries on daily basis was not made in the books of accounts. 27. The revenue have also made their submissions and tried to justify the impugned orders on the grounds that it was not necessary to give details, gist of accusations in the notice to show cause and by not giving such notice, it would not render the proceedings to be void. Further, a detailed reasoning has been given in the inspection report and consequently the short comings in the show cause notice have been explained in the inspection report itself. Counsel for the State in respect of the Assessment Order passed by the same authority, wherein it was stated that nothing wrong was found for the said assessment year, has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were to be produced, the allegation also was not that these are unaccounted goods, rather the only allegation was that entries on daily basis was not made in the books of accounts but the Tribunal in the Impugned Order has repeatedly observed that original documents were not produced. It is rather surprising that the authorities as well as Tribunal totally ignored the VAT Returns filed by the Petitioner for the month of April, 2010, which was filed on 25.05.2010. The Tribunal records the returns which were filed in time but has erroneously stated at para (ix) and (x) of the Impugned Order that the return does not have any column for Inter State purchase details whereas the Petitioner shown all those details. It is evident that the Tribunal has missed out all these details and has consequently given an erroneous finding. The returns for April 2010 were annexed with the Supplementary Affidavit before the Commercial Taxes Tribunal which is at Annexure-10 in the Writ petition. From perusal of the returns, it is evident that all the details of sales and purchases both within the State as well as Inter State transactions have been provided. The authorities below as well as the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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