21 May 2121

An alternative remedy does not create a bar to invoke the jurisdiction under Article 226 of Indian constitution in case where there is violation of principle of natural justice or proceedings are without the jurisdiction - Bombay High Court

Case : M/s. Yogi Petroleum v. Commissioner of VAT, Dadra & Nagar Haveli & Another Writ Petition (Stamp) No. 93644, Writ Petition (Stamp) No. 94222 of 2020 and Writ Petition (Stamp) No. 94223 of 2020

Court : Bombay High Court

Bench : Justice Ujjal Bhuyan and Justice Milind N. Jadhav

Decided on : 21 May 2121

Relevant Statutes

Article 226 of Indian Constitution

 Sections 31, 32, 34, 58, 26 and 28(1) of Dadra and Nagar Haveli Value Added Tax Regulations, 2005

Section 34(8A) of Gujarat Value Added Tax Act, 2003

Brief Facts and Procedural history 

1. The Petitioner is a proprietorship firm in the Union Territory of Dadra and Nagar Haveli which is registered under Dadra and Nagar Haveli Value Added Tax Regulations, 2005 and he was carrying a business of retail petrol pump dealership. The Deputy Commissioner of the Dadra and Nagar Haveli issued a notice for audit of business affairs dated 25.09.2020 for the period of 2010-11, 2011-12 and 2012-13 and directed the petitioner to produce some documents and evidence. The Petitioner was also cautioned in case to failure to comply with the notice which the petitioner replied by order dated 30.09.2020 and stated that his outlet was already assessed for the period of 2010-11, 2011-12 and 2012-13 and time will be needed to trace out the papers due to Covid restrictions.

2. The Deputy Commissioner, without reference to the above reply, ordered that the time be extended till 12.10.2020. On 12.10.2020, the petitioner submitted the document and again stated it had already been assessed. The Deputy Commissioner passed the audit reports on 12.10.2020 and 13.10.2020 under Section 58 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 and stated that there were differences with the returns filed by the retailers and they are liable to pay tax, and interest besides the payment penalties.

3. The present Writ Petition was filed for quashing the above order as it was stated that they are beyond the period of limitation under Section 34 of Dadra and Nagar Haveli Value Added Tax Regulations,  2005 for which the respondent replied in affidavits and stated that there is an alternative remedy available with the petitioner, the writ petition should not be entertained as the audit was conducted by the VAT department are due to practice of evading VAT. The petitioner filed an affidavit in the other two writ petitions and again stated the same thing.

The Issues of the Case

Whether the writ petitions should be entertained as there is an alternative remedy available or the petitioners have committed fraud in respect of due revenue which further enables the respondents to invoke the jurisdiction under section 58 of the Dadra and Nagar Haveli Value Added Tax Regulations,  2005?

Whether the impugned orders of audit dated 12.10.2020 and 13.10.2020 are in violation of the principles of natural justice or impugned notices dated 25.09.2020 and the aforesaid orders are beyond limitation?

Whether the impugned notices dated 25.09.2020 and the consequential orders of audit dated 12.10.2020 and 13.10.2020 are liable to be interfered with by this Court or not? 

The Observations of the Court

1. The Honourable Bombay High Court referred one of the judgments i.e. Harjas Rai Makhija vs. Pusparani Raj Jain, 2017 (2) SCC 797, it was held that there must be a specific allegation of fraud or intent to deceive to constitute fraud not mere concealment or non-disclosure without intent to deceive. The Honourable High Court held that in The notice dated 25.09.2020, there was no allegation of fraud against the petitioner. 

2. The Honourable Bombay High Court observed, as per the audit report there were differences in data received but there was no allegation of fraud visible in this. For this, The Honourable High Court referred on of the judgment i.e. GeoTech Foundations and Construction vs. Commissioner of Central excise Pune, (2008) 224 ELT 177 (SC), It was held that when there is no allegation made in the original notice then it cannot be made in subsequent proceedings.

3. The Honourable Bombay High Court observed that the copies letter dated 29.06.2020 and email dated 11.08.2020 have not been supplied to the petitioner and held that it is important on the part of the deputy Commissioner to furnish the copies or at least the material information to the petitioner. It was further held that failure to furnish copies results in violation of the principle of natural justice.

4. The Honourable Bombay High Court observed that Section 34 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 no assessment or reassessment shall be made after the expiry of four years from the furnish of date of return under section 26, Section 28(1) and Section 32 Dadra and Nagar Haveli Value Added Tax Regulations, 2005 Section 34 (1) (b) Dadra and Nagar Haveli Value Added Tax Regulations, 2005 states that, In case of concealment or failure to disclose the material on the concerned person, the limitation period may be extended by other two or six years.

5. The Honourable Bombay High Court observed that there is a purpose for issuing notice for informing a person that the audit of the affairs of the business shall be conducted according to the various subsections of Section 58 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 But Section 58 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 has to be read with Section 31, 32 and 34 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 for making of assessment and reassessment.

6. The Honourable Bombay High Court observed that the impugned order dated 25.09.2020 is beyond the period of limitation which results in proceedings to order pursuant would also be barred by limitation. The Honourable High Court observed that Section 34(8A) of Gujarat Value Added Tax Act 2003 and section 58 of Dadra and Nagar Haveli Value Added Tax Regulations, 2005 are not identical and held that impugned notices dated 25.09.2020, 12.10.2020 and 13.10.2020 are without the jurisdiction and beyond the period of limitation. 

7. The Honourable Bombay High Court referred one of the judgments Whirlpool Corporation Limited vs. Registrar of TradeMarks (1998) 8 SCC 1, It was held that the alternative remedy does not create a bar to invoke the jurisdiction under Article 226 of the Indian constitution in the case where there are violation of principle of natural justice or proceedings and are without the jurisdiction.

The Decision Held by the Court 

All the Writ Petitions are allowed and all the impugned orders dated 25.09.2020, 12.10.2020 and 13.10.2020 are unsustainable in law and the consequential orders are liable to be interfered with by the Court under Article 226 of the Indian Constitution. 

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