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TMI Blog2024 (2) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders by which the assessments for the years 2012-13, 2013-14 and 2014-15 were revised and the turnover escaped assessment and short payment of taxes were determined and subsequent demand notices dated 09.09.2020 are prima facie illegal and without jurisdiction, and contrary to the provisions of Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Act, 1967. 4. Writ Petition No. 155/2022 pertains to the show cause notice, order and demand notice for the assessment year 2014-2015. Writ Petition No. 156/2020 pertains to the show cause notice, order and demand notice for the assessment year 2012-2013 and Writ Petition No. 157/2020 pertains to the show cause notice, order and demand notice pertaining to the year 2013-2014. 5. The petitioner company is a Government of India undertaking incorporated under the Companies Act, 1956 having its registered office at Mumbai. The petitioner company is engaged in the business of refining the crude petroleum and selling and distribution of petroleum products throughout the country. During the relevant point of time, the petitioner company was a registered dealer under Nagaland (Sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Whereas, cross verification of the statements produced so far by you before this Court with the records filed by you during assessment proceedings etc., reveals the following inconsistencies; Tax Period 2011-12: 1. Form "C" statement shows that there was purchase of LPG worth Rs. 250205245/- during the period. However, the Sales figures as per ADS (excluding tax) shows Rs. 245768240/-only 2. IOC (MD) record shows that it has received 104.5 KL of LPG from IOC (AOD) during the period. Whether such stock were issued inclusive of tax or not and why? 3. No Trading Account was made available before this Court nor filed at the time of assessment. 4. As per IOC (MD) record, 4439.1 KL, worth Rs. 3347476/-of SKO-IND was received from IOC (ADD). Whether such stock were issued inclusive of tax or not and why? 5. CST Sales declared Including tax was Rs. 386152884/-. However, CST Sales supported by Form "C" was Rs. 355538897/- only. Consequently, there is possible evasion of tax by way of assessing sales turnover of Rs. 30613987/- at a lower rate of 2% instead of 12% resulting in short assessment and short payment of tax by Rs. 13061398/- (3673678-612279) 6. No record of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor filed at the time of assessment. 3. As per IOC (MD) record, 334.142KL and 3962.18 KL of LPG (ND&IND) and LPG (D&S) was received from IOC (AOD). Whether such stock were issued Inclusive of tax or not and why? 4. Explain the difference of amount by Rs. 2519.720/- in the CST Net Turnover declared as against figures shown in the break-up (333273822-330754102). Short calculation and short payment of tax by Rs. 79999/- against the turnover of Rs. 329984754/- @2% (6599695- 6519696). 5. CST Sales declared including tax was Rs. 336504450/-. However, CST Sales supported by Form "C" was Rs. 330602310/-only. Consequently, there is possible evasion of tax by way of assessing sales turnover of Rs. 5902140/- at a lower rate of 2% instead of 12% resulting in short assessment and short payment of tax by Rs. 590214/-. 6. No record of purchase of MS, HSD and SKD was made available to this Court despite several notices; No record of transactions effected to other OMC was disclosed. 7. Cross examination of transaction records between IOC (AOD) and IOC (MD) for the period reveals the following inconsistencies in figures; Item Inconsistencies between sales declared in Format III and Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply with the terms of this notice, I shall be at liberty to initiate appropriate action against you under the Act and also pass revision order under Section 20 of the Act ex-parte without any further reference to you." 8. Thereafter, the respondent No. 3 passed a final order in purported exercise of powers under Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 by order dated 07.09.2020, whereby the assessment order dated 16.01.2015 passed by Superintendent of Taxes for the assessment year 2012-2013 was revised and the turnover escaped assessment and short payment of taxes was determined as hereinunder: Tax Period 2012-13 "1. Statutory Forms utilization statement shows that there was purchase of LPG worth Rs. 425134062/- during the period. The Sales figures declared (excluding tax) was Rs. 27,41,03,366/-only. Cross examination with IOC Ltd (MD) (referred as MD for short) record shows that it has received 4372.958 of LPG (ND & IND) from IOC Ltd (AOD) (referred as AOD for short) The sales figures of LPG declared by MD for the period is Rs 13,48,79,562/- only and the closing stock was declared as zero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -only. As per Ms IOC Ltd (MD) (referred as MD for short) statement in Format-111, 334.142 Kl and 3962.18 KL of LPG (ND & IND) and LPG (D&S) respectively were received from AOD. The value calculated on the basis of statement declared and filed by MD at the time of assessment during 2012-13 comes to Rs. 132554207/- only (334.142 KL + 3962.18 KL-4296.32 KL x 30852.95 per KL) Therefore, LPG value amounting to Rs. 157393067/- (Rs 576825709 (Total purchases)- Rs 286878435 (Total sales)- Rs 132554207 (Total Stock issued to MD)] has been short assessed resulting in short payment of tax by Rs 74,76,170/- @ 4.75% 2. To CST Sales over of 10 and MS od tax@ 2% 34 CST sales of HHSD including tax @1 2.6% was Rs. 7734 Thus turnover of Rs 1902164/- (330602310 332504474) taxable 12% was assessed 2% resulting in short assessment and short payment of tax by Rs. 190216 ((228259 (@12%)-38043 (@2%) 3. Cross examination of transaction records between AOD and MD for the period reveals that MD has issued 33744 KL, 11677 KL, 10260 KL of HSD, MS and SKO respectively to AOD; In the absence of any documents available on record to ascertain the value of the stock received from MD, the value per KL is calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred as MD for short) Statement in Format-III reveals that the Firm has received 35500 KL, 12948 KL and 10260 KL of HSD, MS and SKO respectively from MD. The value of the stocks received is calculated on the basis of sales declared by MD in Format III in respect of SKO and Ms HPCL in respect of HSD and MS during the same period. Item Stock received from MD by AOD Value as calculated on the basis of sales statement declared by MD in Format-III and for HPCL during the same period HSD 35500 KL 12948 x 51297.43= Rs 66,41,99,123.64 MS 12948 KL 3550 x 46072.61- Rs. 163,55,77,655 SKO 10260 KL 10260 x 24777.24= Rs. 254214482.40 3. Total turnover escaped assessment during the period item Stock value received from MD Purchases during period Total (stock the received and purchased) (AOD) sales Figures Less CST sales Turnover escaped assessment HSD 35500x46072.61= Rs. 163,55,77,655 Rs. 102575400 1738153055 Rs. 612385702 209767572 915999781 MS 12948x51297.43=Rs 6,41,99,123.64 Rs. 62868795/- 727067918 Rs. 381888800 1105964 344073154 Total Rs. 229,97,76,778/- Rs. 165444195 2465220973 Rs. 994274502/- 210873536 SKO 10260x24777.24 = Rs. 254 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the exercise of the power of Suo motu revision by the Commissioner under Section 20 of the Act is that the order passed by any person appointed under Section 5 of the Act to assist him is erroneous, in so far as it is pre-judicial to the interest of revenue. 15. It is submitted by learned senior counsel that the Commissioner before exercising the powers under Section 20 of the Act has to be satisfied of twin conditions, namely, (a) the order passed by any person appointed under Section 5 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 to assist him (i.e., in the present case, the Assessing Officer) is erroneous and (b) it is pre-judicial to the interest of revenue. If any of these conditions is absent, and if order of Assessing Officer is erroneous, but is not pre-judicial to interest of revenue, or if it is not erroneous order, but is pre-judicial to interest of revenue, recourse cannot be taken to Section 20 of the Act. 16. It is also submitted by learned Senior Counsel, that in the instant case, the respondent No. 3 in his order No. CT/pet/Del/1/2019/2278 dated 09.09.2020, in connection with assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the revenue, must be based on materials available on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such actions will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. I.T.O (1977) 106 ITR 1 (10) SC)." 18. Learned Senior counsel for the petitioner has submitted that under the Act of 1967, the powers to re-assess the escape turnover is primarily vested by Section 14 on the Assessing Officer and same is to be exercised subject to certain limitations. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner with power to re- examine the accounts and determine the turnover himself at a higher figure. It is because the officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, that the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxes which is due from him has far exceeded the power which has been conferred on the Commissioner under Section 20(1) of the Act. The power which is conferred under Section 20 (1) of the Act may be exercised only if order passed by the authorities appointed to assist the Commissioner is erroneous and prejudicial to the interest of revenue, or was not in accordance with law, or was passed without making any inquiry or in undue haste. 25. Learned Senior Counsel for the petitioner has also submitted that the Rule-5 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Rules, 1970 provides that the State Government in exercise of the powers conferred under Section 5 of the Act may appoint by notification in the official gadget, following classes of the officers to assist the Commissioner: (i) Assistant Commissioner of Taxes; (ii) Superintendent of Taxes; (iii) Inspector of Taxes. 26. It is also submitted that Rule 18 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Rules, 1970 provides that the assessment order passed under the provision of Act shall be made in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner has approached this Court without exhausting all alternative remedies available to it. It is submitted that the Statute i.e., Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 provides for statutory appeal against the order of assessment passed by any authority under the Act. 30. It is submitted by the learned Senior Government Counsel that Section 19 of the said Act provides for an appeal against an order of assessment or penalty passed by any authority under the Act within 30 days of the date of service of the said order. It is also submitted by learned Senior Government Counsel that Section 21 (1) of the Act also provides for an appeal against an order passed under Section 19 or an order passed in revision under Section 20 (1) of the said Act. The said appeal lies to the State Government within 60 days of the date on which the order is communicated to the aggrieved person or aggrieved party. 31. It is submitted by learned Senior Government Counsel that as there is an alternative statutory remedy available to the petitioner under the Act itself, these writ petitions against the impugned notices/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs under Article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself. Profitable reference in this regard may be made to Article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on the exercise of power to issue writs. While it is true that exercise of writ powers despite availability of a remedy under the very statute which has been invoked and has given rise to the action impugned in the writ petition ought not to be made in a routine manner, yet, the mere fact that the petitioner before the high court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the high courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power under Article 226 that has evolved through judicial pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles of natural justice; (iii) where the order or the proceedings are wholly without jurisdiction; or (iv) where the vires of an Act is challenged" 37. Thus, from the above judgment of the Apex Court, it becomes clear that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and the Article 226 does not, in terms, impose any limitation or restraint on the exercise of powers to issue writs. Mere existence of an alternative statutory remedy would not oust the jurisdiction of this court to entertain writ petitions and to issue prerogative writs under Article 226 of the Constitution of India, if the case of the petitioner falls within any of the exceptions carved out in the case of "Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai" (Supra). 38. There appears to be no dispute at bar that the power of assessment under Section 14 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 has been delegated to the Superintendent of Taxes by the Commissioner of Taxes under Section 45 of the said Act. In the instant case also, in all the writ petitions, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch inquiry or cause any inquiry to be made, and subject to the provision of this Act, may pass such orders thereon, not being the order prejudicial to dealer, as he thinks fit." 40. From a reading of subsection (1) of Section 20, it is clear that the power of suo-moto revision can be exercised by the Commissioner only if, on examination of the records of any proceeding under this Act, he considers that any order passed therein by the person appointed to assist him is "erroneous in so far as it is prejudicial to the interest of revenue". As observed by a division bench of this court in "Shri Rajendra Singh Vs. Superintendent of Taxes" (Supra), it is therefore, not an arbitrary power and it can be exercised only on fulfillment of requirements laid down under subsection (1). The consideration for the Commissioner as to whether an order is erroneous, in so far as it is prejudicial to the interest of revenue, must be based on the materials available on record of the proceeding called for by him. If there are no materials on record, on the basis of which it can be said that Commissioner is acting in a reasonable manner could have come to such a conclusion, the very initiation of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arrive at a conclusion that the assessment order passed by the officer appointed to assist him is erroneous and prejudicial to the interest of revenue on the basis of records of the proceeding under the Act called for by him and not by calling supporting documents and statements again from the petitioner (assessee). He has in fact engaged into the process of reverification and reassessment without coming into conclusion that the assessment order passed originally was erroneous and prejudicial to the interest of revenue. The finding that the assessment orders are erroneous and prejudicial to the interest of revenue must be based on the materials available from records called for by the Commissioner and for arriving at the said conclusion, he cannot call for the documents from the assessee himself as it would amount to reexamination and reverification of the returns filed by the assessee. 43. In the instant case, though it was mentioned in the impugned order dated 09.09.2020, by the respondent No. 3, that the assessment order passed by the Superintendent of Taxes are erroneous in so far as it is prejudicial to the interest of revenue and requires further enquiry and verifications. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings under section 20, whereas, in the case of re- assessment or re-verification under Section 14 or 13 of the Act, the approach may be different. 45. Further inquiry or other verification, and/or fresh determination can be directed by respondent No. 3 only after coming to conclusion that the original assessment orders of the respondent No. 4 were erroneous and prejudicial to the interest of revenue. Without doing so, respondent no. 3 does not get the power to set aside the earlier assessment by the respondent No. 4 and to revise and determine the turnover escaped assessment and short payment of taxes himself. The Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act , 1967 provides for different shades of power in different provisions of the Act to deal with order of assessment. The said powers are exercised by the authorities in the manner specifically provided by the Act itself and the authorities cannot, in exercise of power of one provision trench upon the powers available under other provision of Act, as has been done in the instant case. 46. Finally, as has been correctly pointed out by the learned senior counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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