M/s Laxmi Narayan Trading Company vs State Of Rajasthan And Ors

The instant letters patent appeal has been preferred by the appellant M/s Laxmi Narayan Trading Company under Article 225 of the Constitution of India read with Rule 134 of the Rajasthan High Court Rules, 1952 being aggrieved of the judgment dated 24.07.2019 passed by the learned Single Bench of this court in S.B. Civil Writ Petition No.12985/2018.

The writ petition aforesaid was preferred by the petitioner against the show cause notices issued by the Assistant Commissioner, Anti-Evasion, Commercial Taxes Department, Sri Ganganagar for initiating proceedings against the petitioner assessee under the provisions of the Rajasthan Valued Added Tax Act, 2003 (for short, 'the Vat Act').

The Principal contention of the petitioner before the learned Single bench was that the recommendation for registration of the case against the petitioners under the provisions of Section 61 of the Vat Act vide communication dated 21.02.2018/23.02.2018 and 13.03.2018 followed by the notice dated 21.03.2018 and 23.03.2018 were beyond the period of limitation and thus, were liable to be struck down.

Learned Single Bench considered the controversy involved in the writ petition and after duly adverting to the relevant provisions of the Vat Act held as below :-

"9. Indisputably, the survey of the business premises of the petitioners was conducted by the Assistant Commercial Taxes Officer, Ward I Circle, Anti Evasion, Sriganganagar on 25.4.16. After the survey, vide notice dated 25.4.16 issued in exercise of the power conferred under Section 75(1) of the VAT Act, the petitioners were directed to produce the sale, purchase voucher, bilties, books of accounts, bank transaction statement, VAT declarations from the date of registration of the firm till the date of survey, which were not produced by them at the time of survey. The notices issued on 25.4.16 were in conformity with the provisions of Section 75(1)(b), which empowers the officer not below the rank of Assistant Commercial Taxes Officer to direct the dealer to produce accounts, registers and documents relating to business activities for examination. The subsequent notices were also issued under Section 75(1) of the VAT Act inasmuch as, pursuant to the notice dated 25.4.16, the petitioners-assessees had sought time to produce the record but failed to do so. The proceedings remained pending on account of the petitioners not producing the record. It is not disputed before this court that after the petitioners producing the requisite record, the authority conducting the survey submitted the report to the Deputy Commissioner (Administration), Commercial Taxes, Sriganganagar, and recommended to register the case against them under Section 61 of the VAT Act. Thereupon, the Deputy Commissioner (Administration), transferred the proceedings to the Assistant Commissioner, Commercial Taxes, Anti Evasion, Sriganganagar for further action. Accordingly, the Assistant Commissioner, Commercial Taxes initiated the proceedings against the petitioners-assessees under Section 25, 18, 55 and 61(2) of the VAT Act for evasion of tax and reversal of the input credit.

In view of the factual position noticed as above, the contention of the petitioners that the proceedings against them under Section 25(1) of the VAT Act were initiated after making out the case vide notice dated 25.4.16 purported to be issued under Section 75(1) of the VAT Act, cannot be accepted by this court. Apparently, the notices issued prior to the impugned notices, were the notices issued directing the petitioners to produce the relevant record so as to enable the Assessing Authority to arrive at the conclusion regarding the evasion/avoidance of tax or the petitioners wrongly availing the ITC and the same cannot be construed to be notices issued under Section 25(1) of the VAT Act. The documents on record in no manner reflects that the notices referred to by the petitioners were issued after making out the case against them rather, the same were issued by the Assessing Authority after the survey to procure the relevant record from the petitioners and the decision to initiate the proceedings was taken only after submission of the inspection report and the recommendations made by the authority, who conducted the survey of the business premises of the petitioners. Thus, the date of notices issued under Section 25(1) of the VAT Act needs to be taken as the date of making out the case against the petitioners and the Assessing Authority would be well within its jurisdiction in passing the assessment order within the period of six months from the date of the said notice, which for the reasons recorded in writing in a particular case may be further extended by the Commissioner for a period not exceeding six months. Needless to say that while computing the period of limitation, the period during which the assessment proceedings remained stayed on account of interim order passed by this court, is also liable to be excluded."

Mr. Lokesh Mathur, learned counsel representing the appellant, vehemently and fervently contended that the impugned order is based on a totally mis-appreciation of the admitted facts available on record. He drew the court's attention to the Vat-14 Form (Annex.4) and other similar forms issued by the respondent authorities and urged that these forms were issued in the year 2016, whereas, the impugned notices came to be issued as late as in the month of March 2018. The statutory period for initiating the proceedings under the Vat Act would be 6 months from the date of evasion. As per Mr. Mathur, since the notices were issued after more than 2 years of the alleged evasion being detected, the proceedings are time barred and are liable to the struck down.

We have given our thoughtful consideration to the submissions advanced by Mr. Mathur and have gone through the impugned orders as well as the original record of the writ petition.

Suffice it to say that the Form-14 notices relied upon by Mr. Mathur, which were issued to the assessee after the survey made in the year 2016, were for the purpose of providing it an opportunity to show cause and adduce evidence against the facts discovered during survey proceedings. It was clearly intimated in these notices that failure to furnish the information/documents without sufficient cause wound render the assessee liable to prosecution and penalty under Section 64 of the Rajasthan Vat Act.

Finally, after assessing the entire facts, the Assistant Commissioner, Administration, issued an order dated 13.03.2018 directing initiation of proceedings and registration of a case under Section 61 (2) of the Vat Act against the appellant. It may be noted here that the order dated 13.03.2018 passed by the Assistant Commissioner, Administration, was never assailed by the petitioner in the writ petition.

In the background of the above facts, we are totally in conformity with the view expressed by the learned Single Bench that the limitation for initiating proceedings would commence only after the assessing authority arrived at a conclusion regarding the evasion/avoidance of tax. The impugned judgment and the notices ex facie do not suffer from any infirmity, illegality or error whatsoever warranting interference in exercise of the letters patent jurisdiction of this court. Hence, the appeal fails and is dismissed as being devoid of merit.

No order as to costs.