Ajmer Auto Agencies Private Limited vs Commercial Taxes officer

Mohammad Rafiq, J.—All these sales tax revision petitions have been filed by petitioner M/s. Ajmer Auto Agencies Private Limited seeking to challenge order dated 22.02.2013 passed by Commercial Taxes Officer, Anti Evasion, Ajmer, and orders dated 26.12.2013 and 07.03.2014 passed by the Rajasthan Tax Board, Ajmer. The Commercial Taxes Officer, Anti Evasion, Ajmer, passed an order dated 22.02.2013 imposing tax including penalty under Sections 61 and 55 of the Rajasthan Value Added Tax Act, 2003 (for short, ''the Act of 2003''). By order dated 26.12.2013, the Rajasthan Tax Board remanded the matter to the Commercial Taxes Officer, Anti Evasion, Ajmer, to decide the same afresh and vide order dated 07.03.2014 the application filed by petitioner for rectification in the order dated 26.12.2013 was rejected by the Rajasthan Tax Board.

Facts of the case are that Commercial Taxes Officer, Anti-Evasion, Ajmer, (for short, ''the CTO'') surveyed the business premises of petitioner company on 06.01.2009. After allowing all kind of discounts, credit notes and schemes, he recommended the matter to Deputy Commissioner (Administration), Ajmer, for composition of net turnover. The Assistant Commercial Taxes Officer, Anti-Evasion-III, Ajmer, (for short, ''the ACTO'') prepared ex-parte audit report on 30.03.2011. He detected the case under Section 61 of the Act of 2003 and recommended the case to Deputy Commissioner (Administration), Ajmer on 05.10.2011 for transfer of file under Section 37(4) of the Act of 2003 under prosecutor judge theory. It was thereupon that the Deputy Commissioner (Administration), Ajmer, transferred he file to Commercial Taxes Officer, Anti Evasion, Ajmer, for final disposal.

Commercial Taxes Officer, Anti Evasion, Ajmer, in compliance of the aforesaid order, issued notice on 05.10.2011 under Section 25(1) read with Sections 26(1), 55 and 61 of the Act of 2003. The Assistant Commercial Taxes Officer, Anti Evasion-III, Ajmer, surveyed the business premises of the petitioner company and collected the records related to Assessment Years 2006-2007 to 2011-2012. In Revision Petition No. 107/2014 the assessment year is 2009-2010, in Revision Petition No. 108/2014 the assessment year is 2007-2008, in Revision Petition No. 109/2014 the assessment year is 2006-2007, in Revision Petition No. 110/2014 the assessment year is 2008-2009, in Revision Petition No. 148/2014 the assessment year is 2007-2008 and in Revision Petition No. 145/2014 the assessment year is 2006-2007. The CTO again issued notice to petitioner Company under Section 25(1) read with Sections 26 (1), 55 and 61 of the Act of 2003, proposing tax on the turnover of Rs. 19,20,11,330/-. Similar notice dated 15.03.2012 was issued by the CTO to petitioner Company proposing tax on the turnover of Rs. 94,00,774/- for assessment year 2006-2007, which notice and consequential orders passed thereafter by the Commercial Tax Officer and Rajasthan Tax Board, are under challenge in S.B. Sales Tax Revision Petition No. 109/2014. The petitioner Company submitted its preliminary objections to the notice on 11.01.2012. The CTO thereafter issued another notice on 30.01.2012. Petitioner company submitted detailed preliminary objection along-with para-wise submissions on 21.02.2012. The CTO, based on Dealer Management System register, which, as per petitioner, does not cover discounts, bonus, exchange bonus etc., passed order on 22.02.2012 imposing tax on the turnover including penalty under Section 61 and interest under Section 55 of the Act of 2003.

It was thereafter that the assessing authority passed order on 29.02.2012 under Sections 23 and 24 of the Act of 2003. Petitioner company filed an appeal on 01.05.2012 against the said order before the Deputy Commissioner (Appeals), Ajmer, who, vide order dated 25.07.2012, set aside the demand and remanded the matters to the same Commercial Taxes Officer, Ajmer. Petitioner company filed second appeal along-with stay application before the Rajasthan Tax Board on 21.08.2012. Simultaneously, it also moved transfer application before the Commissioner, Commercial Taxes Department, Government of Rajasthan, seeking transfer of petitioner company from present CTO-AE, Ajmer to other competent authority within the State of Rajasthan. The ACCT (VAT and IT), vide order dated 28.08.2012, rejected the transfer application filed by petitioner company. The CTO again issued notice to petitioner company on 07.09.2012 after making enquiry from Income Tax Department and State Bank of India, pointing out various discrepancies in figures submitted to the Department. The Rajasthan Tax Board, vide order dated 11.09.2012, rejected the said application filed by petitioner company stating that it had no power to stay the proceedings. The assessing authority, by order dated 17.09.2012, rectified its earlier order dated 29.02.2012 passed under Section 33 of the Act of 2003 reducing the amount of demand of Rs. 61,96,830/-. Being aggrieved thereby, petitioner company preferred a writ petition under Article 226 of the Constitution of India before this court. This court, vide order dated 25.10.2012, stayed proceedings in the matter and directed the Rajasthan Tax Board to hear and decide the appeal afresh. It was thereafter that the Rajasthan Tax Board remanded the matter vide order dated 29.12.2013 to the CTO, AE-Ajmer, to decide the matter afresh. The Rajasthan Tax Board, by order dated 07.03.2014, rejected the rectification application. Petitioner company raised preliminary objection before the CTO, who, by order dated 15.04.2014, rejected the same without application of mind. Hence these petitions.

Shri N.K. Maloo, learned Senior Counsel associated by Shri Sarvesh Jain, for petitioner company, has argued that the Rajasthan Tax Board has committed an illegality in remanding the matter to the CTO, AE-Ajmer. When the entire material with records and documents were before the Rajasthan Tax Board, it should have itself passed fresh order of assessment rather than remanding the matter to the CTO.

According to the petitioner, that remand was confined only for considering the amount of discount, out of the remitted tax evasion amount. The Tax Board has while affirming the order of the Deputy Commissioner (Appeals) remanded the entire matter to the CTO for passing fresh order after providing opportunity of hearing to the petitioner assessee. When the Tax Board decided to remand the matter to the CTO on all the issues, passing of fresh order in its entirety, there was no justification for the Tax Board to record findings against petitioner assessee. Learned senior counsel has invited attention of the court to such findings recorded by the Tax Board in Para 6, 7, 8, 9 and 10.

Learned Senior Counsel also argued that the matter should not have been remanded to the same CTO, who had prepared the case of anti evasion against the petitioner as he was bound to be biased. In this connection, he has relied on judgment of this court in Ram Chandra Sharma and Another Vs. Smt. Veera Saini, (2005) 2 RLW 1068 : (2005) 2 WLC 183 .

Learned Senior Counsel submitted that the CTO himself had prepared the case of anti evasion, therefore, he was bound to have a biased approach towards the petitioner and remand of the matter to the CTO was wholly illegal. At the maximum, the Rajasthan Tax Board could have formulated certain questions and forwarded the same to the Deputy Commissioner (Appeals) for adjudication. The Rajasthan Tax Board has wrongly held that the assessing authority has acquired jurisdiction vide previous survey dated 06.01.2009 and thereafter subsequent survey dated 09.12.2011. It is argued that after invocation of Section 25 of the Act, no action was ever taken by the Department against the petitioner company for more than a period of two years. The ACTO-AE-III, Ajmer, without recording any reason, recommended the case to the Deputy Commissioner (Administration) and no statement has been recorded prior to issuance of notice dated 05.10.2011. After issuance of notice by the CTO, AE-Ajmer, the ACTO, Ward-I, AE-Ajmer, surveyed the business premise of the petitioner company on 09.12.2011. It was on the basis of the report submitted by them,, the CTO, AE-Ajmer, again issued notice on 30.12.2011 to the petitioner company under Section 25(1) read with Sections 26(1), 55 and 61 of the Act of 2003. When the department admits that the survey took place on 25.07.2011, it cannot contend that jurisdiction occurs from 06.01.2009. This is nothing but an afterthought and onus lies on the department.

It is argued that second time survey was conducted by ACTO in presence of the CTO himself and therefore he was biased. Reliance in this connection has been placed on the judgment of the Bombay High Court reported in Orkay Silk Mills Limited and another Vs. M.S. Bindra and others, (1986) 9 ECC 44 : (1988) 19 ECR 503 : (1988) 33 ELT 48 .

It is argued that ex-parte audit report was submitted by ACTO, AE-Ajmer, without obtaining any clarification from the petitioner company and M/s. Maruti Suzuki India Limited, Gurgaon. No notice was issued to the petitioner nor opportunity of hearing was being provided to him. Thereafter the matter was recommended for transfer to CTO, Ajmer. Previously, the ACTO collected the information from M/s. Maruti Suzuki India Limited and thereafter conducted survey of business premises of petitioner company to collect the sales register maintained by them, hence the prosecutor judge theory is applicable in the matter of the petitioner company. The order passed by the Deputy Commissioner (Appeals) dated 25.07.2012 was liable to be set aside. In this connection, reliance is placed on the judgment of the Supreme Court in Mohd. Yunus Khan Vs. State of U.P. and Others, (2010) 10 JT 341 : (2010) 10 SCALE 286 : (2010) 10 SCC 539 : (2011) 1 SCC(L&S) 180 : (2010) 6 SLR 88 : (2010) AIRSCW 6089 : (2010) 7 Supreme 970 .

Shri N.K. Maloo, learned Senior Counsel, argued that the remand of the matter to the CTO/assessing officer is nothing but an eye wash and he is bound to follow to the law set by the Tax Board. Learned Senior Counsel in this connection, has referred to the final report and comments made by the Tax Board in its judgment. Petitioner company should have been given fresh opportunity so that correct turnover could be measured. It is argued that the proceedings for fresh assessment on the basis of survey conducted by the department were entirely different and learned Tax Board has failed to appreciate that the documents obtained from the Internet cannot be relied. The petitioner cited a judgment of Division Bench of Tax Board itself in the matter of CTO Circle-B, Udaipur v. M/s. Rajesh R Bhosle (New Delhi) reported in 2014 (38) TUD 63, in which it was held that the documents obtained from Internet cannot be relied unless they are proved by the concerned authority.

Learned Senior Counsel for petitioner company argued that the Tax Board was wholly unjustified in not rectifying the mistake and that the order passed by it suffers from mistakes apparent on the face of the record.

Learned Senior Counsel argued that merely on the basis of details obtained from the Excise and Taxation, Gurgaon, proceedings have been initiated. Moreover, the assessing officer has not rebutted the From C and VAT 47 duly submitted by the petitioner in the initial stage when the same were provided before him.

Learned Senior Counsel argued that prosecutor cannot be a judge of its own finding. Since in the present matter prosecutor ACTO never issued notice under Section 75(1) of the Act, whereas CTO directly issued notice to the petitioner on 05.10.2011 treating it a case of evasion of tax or escapement of turnover.

Per contra, Shri R.B. Mathur, learned counsel for the respondent department, has opposed the writ petitions and argued that the order passed by the CTO, Deputy Commissioner (Appeals) and the Rajasthan Tax Board are perfectly just and legal and do not suffer from any illegality. No question of law muchless any substantial question is involved in the mater. The Rajasthan Tax Board has categorically held that the revision petition was not maintainable.

The appeal was preferred before the Tax Board by the petitioner assessee itself dissatisfied with the order passed by the Deputy Commissioner (Appeals), who vide order dated 25.07.2012 passed in the first appeal of the petitioner while setting aside the order of assessment dated 22.02.2012 remanded the matter.

It is contended that though the matter was remanded to the same CTO who originally passed the assessment order but the matter has been transferred long ago and now the matter shall be dealt with by another CTO and now the entire order would be passed by another CTO and therefore there is no question of any biasness.

At the outset, it may be observed that the order rejecting the rectification application cannot be faulted because the order dated 07.03.2014 with respect to which rectification application was filed, because the cited judgment in CTO Circle-B, Udaipur v. M/s. Rajesh R Bhosle (New Delhi) reported in 2014 (38) TUD 63 was of the Tax Board itself and not of the jurisdictional High Court or the Supreme Court. Besides the demand of tax was not based on the information procured only from Internet. Department also claimed to have procured the required information also from M/s. Maruti Suzuki India Limited. The Tax Board cannot therefore be held to have committed any illegality in rejecting the application for rectification.

This court, therefore, does not deem it appropriate to interfere with the order of the Rajasthan Tax Board as it is the order in affirmation of the order of the Deputy Commissioner (Appeals), who remanded the matter to the CTO on one issue and now the Tax Board has remanded the matter on all the issues. The findings recorded by the Tax Board need not be interfered with, but if the Tax Board was persuaded to remand the matter to the CTO for deciding all the issues afresh rather than on one and single issue on which the matter was remanded by the Deputy Commissioner (Appeals), there was no occasion for the Tax Board to have recorded the findings in Para 6 to 10 as referred to above. While, therefore, setting aside the findings, the order of remand is affirmed with direction that fresh order shall be passed by the CTO on all the issues.

The petitioner shall be entitled to agitate all arguments as may be available to them in law before the assessing authority. The CTO, who shall decide the same in accordance with law without being influenced by any observation made and findings recorded either by Tax Board or the Deputy Commissioner (Appeals).

In view of above, all the revision petitions are allowed in part and are disposed of with direction to the Commercial Taxes Officer, Anti-Evasion, Ajmer, to pass fresh order after providing opportunity of hearing to the petitioner in accordance with law.