Partly allowed

M/S Betel Store v. Assistant Commercial Taxes Officer, Ward-Ii

Rajasthan HC21 Jan 2021STR/4/2020

Case brief

AI extract

What is this about?

A High Court of Rajasthan revision order addressed whether an assessing authority could charge VAT under Section 75(8) of the Rajasthan Value Added Tax Act, 2003, alongside a penalty for unaccounted goods found during a survey. The court held that Section 75(8) only permits penalty, not VAT.

What did the court decide?

The assessment order is set aside to the extent that VAT was charged under Section 75(8), and the assessing authority is directed to pass a fresh order on the said paras in accordance with this judgme

M/S Betel Store Vs Assistant Commercial Taxes… — Writ and Judicial Review | Rajasthan HC (2021)

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(1 of 5)

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[STR-4/2020]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Sales Tax Ref./rev. No. 4/2020

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M/s Betel Store, Matka Gali, Opp. Gol Katla, Station Road, Bikaner Through Its Proprietor Shri Mahadev Surana S/o Shri Lal Chand Surana, Aged About 70 Years, R/o Matka Gali, Opp Gol Katla, Station Road, Bikaner (Raj.)

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----Petitioner

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Versus

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Assistant Commercial Taxes Officer, Ward-Ii, Circle - B, Commercial Taxes Department , Bikaner (Raj.)

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----Respondent

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For Petitioner(s) : Mr. Lokesh Mathur For Respondent(s) : Mr. Sandeep Bhandawat.

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HON'BLE MR. JUSTICE ARUN BHANSALI

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Order

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21/01/2021

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At the request of learned counsel for the parties, the revision petition has been finally heard at the stage of admission.

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This revision petition is directed against the order dated 28.11.2019 passed by the Rajasthan Tax Board, Ajmer ('Tax Board'), whereby the appeal filed by the petitioner against the order dated 26.02.2016 passed by the Appellate Authority, Commercial Taxes, Bikaner, has been rejected. The Appellate Authority, in-turn, has rejected the appeal filed by the petitioner against assessment order dated 31.10.2013.

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The petitioner is a partnership firm and is engaged in sale / purchase of Pan Masala, Cigarette, Tobacco and other items. On 03.07.2012, the business premises of the petitioner were surveyed by the Assistant Commercial Taxes Officer, Anti Evasion,

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(2 of 5)

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[STR-4/2020]

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Bikaner. The authority prepared inventory of the stock found in the business premises and issued notices to the petitioner to produce the book of accounts for physical verification, which were produced by the petitioner, however, the authority forwarded the case to the Deputy Commissioner (Admn.) for further action.

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The Deputy Commissioner (Admn.) issued notice to the petitioner under Sections 25, 61, 55, 56 & 75(8) of the Rajasthan Value Added Tax Act, 2003 ('the Act').

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After hearing, the assessing authority raised a demand of Rs. 2,50,647/-. While making the assessment, the authority divided the case in four parts and in para No.1 on finding that at the time of physical verification, goods worth Rs.3,26,022/exigible to 50% tax rate were found, whereas in the books only stock of Rs.1,12,140/- was declared and as such, there was excess stock worth Rs.2,13,882/- and invoking provisions of Section 75(8) of the Act, imposed 30% penalty to the tune of Rs.64,165/- and charged 50% VAT amounting to Rs.1,06,941/-.

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In para No.2, as the goods were exigible to tax rate of 5% and the excess found was Rs.82,297/-, again invoking powers under Section 75(8) of the Act imposed penalty at five times of the chargeable tax i.e. 25% amounting to Rs.25,574/- and VAT @ 5% to the tune of Rs.4,150/-.

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In para No.3 tax was charged at Rs.43/- under Section 61 of the Act and in para No.4 Rs.17,907/-.

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Feeling aggrieved, the petitioner filed an appeal.

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Before the Appellate Authority, issues were raised regarding the validity of the survey conducted and other issues, which were declined.

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(3 of 5)

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[STR-4/2020]

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Before the Tax Board in the appeal filed by the appellant, it appears that again various issues were raised regarding imposition of penalty on the ground that the appellant had got himself registered and was allowed composition with retrospective effect and as such, the penalty / tax could not be imposed. However, the Tax Board on finding that as the survey had already taken place, merely because composition was allowed with retrospective effect, the petitioner was found not entitled for any relief and consequently, dismissed the revision petition.

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Learned counsel for the petitioner fairly submitted that though the issues raised before the Appellate Authority and the Tax Board, may not have substance, however, a bare perusal of the assessment order clearly indicates that the assessing authority, while exercising power under Section 75(8) of the Act, has exceeded its jurisdiction in ordering for payment of VAT over and above the amount of penalty.

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With reference to provisions of Section 75(8) of the Act, it was submitted that the said provision only provide for payment of penalty for possession of goods not accounted for and therefore, to the said extent the order requires interference.

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Learned counsel for the respondent department made submissions that the petitioner is not entitled for any relief as no such issue was raised before the Appellate Authority and/or Tax Board and therefore, the revision deserves to be dismissed.

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I have considered the submissions made by learned counsel for the parties and have perused the material available on record.

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A perusal of the orders passed by the Appellate Authority and the Tax Board, though do not reflect that the issue of the assessing authority exercising powers beyond provisions of

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(4 of 5)

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[STR-4/2020]

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Section 75(8) of the Act was raised, however, a bare reading of the assessment order clearly reflect that the assessing authority besides imposing penalty has ordered for payment of VAT also, which is against the express language of provision of Section 75(8) of the Act.

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The assessing authority, inter-alia, observed as under :-

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"isjk ua- 1 %& oDr losZ{k.k fnukad 03-07-2012 dks HkkSfrd lR;kiu ij O;olk;h ds ikl izFke fcanw ij dj ;ksX; 50 izfr'kr dk eky : 270226 rFkk xksnke esa : 55796 bl izdkj dqy : 326022 dk eky ik;k x;k tcfd O;olk;h dh cfg;kr ls : 112140 dk LVkWd ?kksf"kr gS vr% : 2]13]882 dk 50 izfr'kr ls dj ;ksX; eky iku elkyk] chM+h] flxjsV] rEckdw vkfn ?kksf"kr LVkWd ls vf/kd ik;k x;kA blls Li"V gksrk gS fd O;olk;h us fu;fer ys[kk iqLrdksa esa fcuk tek [kpZ dj] djkioapu fd;k gS] uksfVl ds tokc esa O;olk;h us bl laca/k esa dksbZ larks"ktud izR;qrj is'k ugha fd;k gSA vr% v?kksf"kr ik, x, iku elkyk] flxjsV] chMh] rackdw mRikn ij /kkjk 75¼8½ ds rgr nj 30 izfr'kr ls 'kkfLr : 64165 ,oa nj 50 izfr'kr ls osV : 106941 fu/kkZfjr fd;k tkrk gSA

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isjk ua- 2 %& O;olk;h ds ikl HkkSfrd lR;kiu ij 5 izfr'kr ls dj ;ksX; eky nwdku ij : 87490 ,oa xksnke esa : 15622 bl izdkj dqy 103112 : dk ik;k x;k gS tcfd ys[kkiqLrdksa ds vuqlkj : 20815 dk gh eky ?kksf"kr gS vr% : 82297 dk 5 izfr'kr nj ls dj ;ksX; eky ?kksf"kr LVkWd ls vf/kd ik;k x;k gSA blls Li"V gksrk gS fd O;ogkjh us viuh ys[kkiqLrdksa esa fcuk tek [kpZ dj djkioapu fd;k gSA uksfVl dh ikyuk esa izLrqr tokc esa larks"kizn izR;qrj is'k ugha fd;k gSA vr% 5 izfr'kr dh dj nj dk eky : 82297 ij /kkjk 75¼8½ ds rgr 25 izfr'kr ¼dj nj dh ikap xq.kk½ ls 'kkfLr : 20574 ,oa 5 izfr'kr ls osV : 4115 fu/kkZfjr fd;k tkrk gSA"

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Provision of Section 75(8) of the Act reads as under :-

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"75. Power of entry, inspection and seizure of accounts and goods:-

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(8)- The assessing authority or the officer referred to in sub-section (6) may, after having given the dealer an opportunity of being heard and after having held such further enquiry as it may consider fit, impose on him, for the possession of goods not accounted for, whether seized or not under sub-section (6), a penalty equal to the amount of five times of the tax leviable on such goods or thirty percent of the value of such goods whichever is less, and such authority or officer may release the goods, if seized, on payment of the penalty

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(5 of 5) [STR-4/2020]

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imposed or on furnishing such security for the payment thereof as it may consider necessary."

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(emphasis added)

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A perusal of provision of Section 75(8) of the Act reveals that if on enquiry, the assessee is found in possession of goods not accounted for, a penalty equal to the amount of five times of the tax leviable on such goods or 30% of the value of such goods whichever is less, can be imposed. The section, nowhere provides for charging VAT on the goods in possession but not accounted for, which imposition appears to be without any basis as the said goods were still in possession of the assessee and it was not a case of unaccounted sale.

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A perusal of the observations made in the assessment order (supra) indicates that besides the penalty, VAT has also been charged exercising powers under Section 75(8) of the Act, which cannot be sustained.

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Consequently, the revision petition is partly allowed to the extent that the assessment order dated 31.10.2013 as upheld by the appellate authority and Tax Board is set-aside to the extent of para Nos.1 & 2 quoted herein-above and the assessing authority is directed to pass a fresh order qua the said paras in accordance with what has been observed herein-above.

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(ARUN BHANSALI),J

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84-Rmathur/-

M/S Betel Store v. Assistant Commercial Taxes Officer, Ward-Ii

Case brief

What is this about?

What did the court decide?

M/S Betel Store v. Assistant Commercial Taxes Officer, Ward-Ii

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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