TMI Blog2010 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ned on invoices were in respect of two-wheeler bikes. Appeal dismissed. - Writ Petition No. 5413 of 2008 - - - Dated:- 15-4-2010 - DAGA V.C. AND TATED K.K. , JJ. The judgment of the court was delivered by K.K. TATED J.- Heard. Perused the petition. The petitioners by this writ petition filed under article 226 of the Constitution of India, are challenging two notices both dated February 14, 2008; one under section 35 of the Bombay Sales Tax Act, 1959 and another under rule 9A of the Central Sales Tax (Bombay) Rules, 1957 issued by the Assistant Commissioner of Sales Tax, Nashik for initiation of reassessment proceedings for the period from April 1, 1999 to March 31, 2000 on the following main grounds: Reasons for reopening (A) Concealment of the following sales for the period 1999-2000: (a) Sale to M/s. Venues Chem was for Rs. 54,72,946 whereas as per bank statement, the actual sale was for Rs. 1,18,00,000. (b) Sale to M/s. Sainath Petro Pvt. Ltd., was for Rs. 1,83,52,863 whereas as per the bank statement, the actual sale was for Rs. 2,10,09,586. (c) Sale to M/s. Siddhanath Ind. was for Rs. 54,93,575 whereas as per the bank statement, the actual sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners raised the following contentions: (a) That, the initiation of reassessment proceedings was barred by limitation; (b) That, the burden lies on the Department to prove that C forms submitted by the petitioners were bogus; and (c) That, the Department failed to provide documentary proof though demanded by the petitioners vide their letter dated March 10, 2008. In support of the above submissions, Mr. Jetly submitted that the petitioners did all transactions with their purchasers through the cheques and accepted all payments from their purchasers by cheques only. He further submitted that the C forms submitted by the petitioners with the Department were received by them from their purchasers. According to him, on making inquiry the petitioners learnt that those purchasers were genuine. For that purpose the petitioners filed the additional affidavit dated March 22, 2010. He further submitted that though the petitioners called upon the respondents by their letter dated March 10, 2008 for supplying copies of letters sent by the respondents to the various R.T.O. offices, the respondents failed to do so. He further submitted that in any case initiation of reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the purchasers are registered dealers and the goods purchased are specified in their certificates. According to him, once the petitioners are satisfied on two matters, i.e., the representations made to them in the manner prescribed by the rules and the representations are recorded in declarations in form C, the petitioners are under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods, he incurs a penalty under section 10 of the CST Act, 1956 and this penalty is incurred by the purchasing dealers and cannot be imposed on the petitioners. Mr. Jetly further submitted that, the petitioners were granted deduction/concessional rate of tax in respect of inter-State sales made by them because the goods were purchased for resale or for use as raw material in the manufacture of goods for sale and thus, intended use of the goods purchased was sought to be ensured by taking a declaration in the prescribed form C from the purchasing dealer. However, if the declaration is found to be false or if the goods are utilized by the purchasing dealers for so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the reassessment is must. Mr. Sonpal further submitted that at the time of original assessment, the books of account produced by the petitioners were verified by the then assessing authority and he passed the appropriate order. When the documents submitted at the time of original assessment were cross verified it was then noticed that there were irregularities in those documents and therefore, the impugned notices in form No. 28 of the BST Act, 1959 and in form No. VIB of the Central Rules were issued which were legal and within jurisdiction and as per the provisions of law to give the petitioners reasonable opportunity of being heard before passing an appropriate order under section 35 of the BST Act, 1959 and under rule 9A of the Central Sales Tax (Bombay) Rules, 1957. Per contra Mr. Sonpal, the learned A Panel Counsel appearing on behalf of the respondents submitted that in view of the provisions of section 35 of the BST Act, 1959, the proceedings for reassessment could be initiated even after five years but before expiry of eight years, if it is found that there was disclosure of incorrect facts or fraud is committed by the assessee. He submitted that in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G-21-663453 6075762 Karnataka Report indicates that C form is bogus. Mr. Sonpal, thus, submitted that the petition is liable to be dismissed being devoid of merits. The respondents filed an additional affidavit dated March 18, 2010 annexing the various letters received from the authorities of other States and the letters issued by the R.T.O. showing that the C forms relied upon by the petitioners are bogus and the vehicle numbers stated on the invoices are in respect of scooters and bikes. On the basis of these documents, Mr. Sonpal submitted that it was necessary to carry out investigation in respect of the petitioners' assessment for the financial year from April 1, 1999 to March 31, 2000 and therefore, there is no substance in the present petition and the same is liable to be dismissed. Rejoinder The petitioners have also filed a rejoinder dated March 25, 2010 annexing some of the documents of the private parties from whom they received C forms to show that those parties were genuine. Relying on those documents, Mr. Jetly submitted that for the purpose of reopening the assessment, the limitation was of five years, however, in the present case the notices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every authority cited at the Bar since the legal position with respect to the law relating to reassessment is fairly settled and therefore, the case in hand is being decided on the peculiar facts of the case emerging from the record. The facts emerging from the record prima facie show that the vehicle numbers given by the petitioners on their invoices mostly relate to scooters and bikes. In the teeth of this clinching material relating to the vehicles, it is clear that it is not possible for anybody to transport the goods on the two wheeler bikes from one State to another. The impugned notices for reassessment for the period April 1, 1999 to March 31, 2000 are based on some material information gathered by the Department, which cannot be brushed aside. There appears to be some substance in the allegations made by the Department in the impugned notices and those allegations are required to be investigated. Even one potent ground supported by prima facie material is sufficient to conclude prima facie suppression of correct information or disclosure of wrong information by the assessee, assuming the assessee to be right with respect to the nature of C forms concerned. Needless to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y time within five years, of the end of the year, after giving the dealer a reasonable opportunity of being heard, may proceed to assess or re-assess, to the best of his judgment, the amount of tax due from such dealer: Provided that, the amount of tax shall be assessed at the rates at which it would have been assessed had there been no under assessment or escapement, but after making deductions (if any) permitted from time to time by or under this Act: Provided further that, where in respect of such turnover an order has already been passed in appeal or revision under this Act, the Commissioner shall make a report to the appropriate appellate or revising authority under this Act, which shall thereupon after giving the dealer concerned a reasonable opportunity of being heard, pass such order as it deems fit. (1A) If, after assessment of a dealer is made under section 33, except under sub-section (2) thereof, in respect of any period, it is found that the total amount of tax paid with returns is less than eighty per cent of the tax so assessed and if the dealer has been assessed under sub-section (2) of section 33 in respect of any of the five periods immediately precedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business within the same State or in another State. In the present case, if the material brought to the notice of the assessing authority is to be relied upon then it is rather not possible to move the goods from one State to another. On the basis of the documents on record only the assessing authority could have had reason to believe that incorrect information was submitted with the return by the petitioner-assessee. The apex court, in the matter of Income-tax Officer, Jodhpur v. Purushottam Das Bangur reported in [1997] 224 ITR 362 (SC); CDJ 1997 SC 1595, held that on the basis of information contained in the letter produced by the parties, the officer has reason to believe that the assessee must have supplied incorrect information or produced incorrect documents. Paragraph Nos. 10 and 11 of the said judgment read thus (at page 369 of ITR): 10. The High Court has proceeded on the basis that the said letter of Shri Bagai did not contain any information and that there was neither evidence of manipulation nor evidence or collusive transactions referred to in the letter and that no inquiries were made by the Income-tax Officer after the receipt of the letter so as to constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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