Victor Vegas vs Commercial Tax Officer

Dr. Jawad Rahim, J.—The petitioner, in this writ action has called in question the assessment orders passed by the respondent vide Annexure H and J are in support of the relief has urged thus:

The petitioner, a proprietary concern, claims to be in construction business and is registered as a dealer under the provisions of the Karnataka Value Added Tax, 2003 (hereinafter referred to as the Act, for brevity). Petitioner is now in the process of completing a project called ''Samruddhi Hills'' ''at Salmara area, Karkala from the year 2010-11. The project is for its customer, M/s. Strecon Builders and Developers. Work commenced and is reaching completion.

While the work was in progress, during the financial years 2010-11 and 2011-12, petitioner has received Rs. 2,04,75,000/- and Rs. 95,22,898/- respectively and claims to have filed returns and submitted receipts and output tax payable after claiming input tax credit and deduction towards labour and other charges. Petitioner claims to have purchased goods required for work from registered dealers and due to improper advice from auditors, it could not file proper returns.

On inspection of the business premises of the petitioner by the Assistant Commissioner of Commercial Taxes on 8.3.2012, he found from the books of account available that petitioner was liable to pay tax of Rs. 8,96,813/- for the year 2010-11 and Rs. 4,08,656/- for the subsequent year, i.e. 2011-12. He was advised to prepare and file returns under VAT.

Notice in Form VAT 275 (Annexure-A) was issued on 29.11.2012 directing the petitioner to keep the books of account ready for the year 2010-11 for verification by the respondent on 20.12.2012. Petitioner claims the authorities have inspected the books and prepared the statement, signed by the petitioner which is at Annexure-B. It is alleged, on 28.12.2013 another proposition notice was issued u/s 38(2) of the Act disallowing input credit for the relevant period for verification. Petitioner claims to have appeared on 26.11.2013 and produced accounts and thereafter another notice was issued on 30.11.2013 under Sections 72(1)(a)(ii) and 72(1)(b)(ii) as well as 36(1) of the Act, proposing to levy penalty and calling upon the petitioner to respond. Thereafter a corrigendum to the proposition notice was issued by the authorities on 29.11.2013 and 30.11.2013 vide Annexures-C, D and E.

Petitioner claims to have received another notice on 21.12.2013 under the aforesaid provisions proposing to levy tax, penalty and interest again disallowing exemptions available. The same is produced at Annexure-F. Petitioner submits it was given only 7 days time to file objection to produce books of account which was immediately not possible, however, he has co-operated with the Department by furnishing books maintained from 20.10.13 to 29.12.2012.

The grievance of the petitioner is, he was suffering from uncontrolled HTN and BPPV and was under the treatment of Dr. T.M.A. Pai Hospital, Udupi, from 16.12.2013 to 13.1.2014 consequent to which he could not pursue the matter. The main grievance is, the demand made by the respondent to determine tax, penalty and interest is without giving opportunity.

Learned Addl. Govt. Advocate, Mr. Girikumar very rightly points out that from the narration of fact at Annexure-F, petitioner was given sufficient opportunity to produce books of account and other documents in time, but he has not availed of it. He produced it in instalments that too, not called for by the authorities. In the circumstances, he justifies the action.

However, taking into consideration all attending circumstances, I am satisfied imposition of penalty and levy of interest must precede full opportunity. The fact that petitioner was called upon to produce documents is not in dispute. But the same was not to the satisfaction of the authority. If the petitioner has sufficient material in his possession, then the interest of justice demands he should be given opportunity to produce them so that there will be a realistic assessment of tax due and not notional. Being of this view, the impugned orders at Annexures-H and J for the relevant period, i.e. 2010-11 and 2011-12 dated 8.1.2014 are hereby quashed. Similarly demand notices dated 9.1.2014 in Form VAT 180 for the same period vide Annexures-K and L are also quashed. The petitioner is directed to produce all books of account, documents and any other material that is required for assessment before the respondent within two weeks from today, and shall appear before the authority on 19.3.2014. Thereupon the authority shall give such reasonable opportunity as circumstances require and pass a fresh order in accordance with law. The writ petitions stand allowed in terms of this order. Rule issued is made absolute.

Sri S.V. Girikumar, Addl. Govt. Advocate is permitted to file memo of appearance within four weeks.