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M/s Flipkart India Pvt. Ltd Versus State of U.P. & Others

2016 (5) TMI 386 - ALLAHABAD HIGH COURT

Allowability of change of place of business - Application rejected on the ground that a belated application was filed, inasmuch as the petitioner shifted his place of business on 20.01.2013 without previous intimation and that the application for change of place of business was filed after 11 months on 05.12.2013. Also the petitioner did not give details of closure of its business at Noida nor filed the filing fee of ₹ 20/-.

Held that:- the application form of the petitioner in .....

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ts. The ground for rejecting the application for change of place of business on the ground that the application was filed belatedly is patently erroneous. The registering authority has not considered the provisions of Section 17 (14) (a) of the Vat Act, which makes it obligatory upon the registering authority to carry out the amendment irrespective of the fact that the application was not furnished within the prescribed period as provided under Section 75 of the Act. We further find that there i .....

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ould have allowed the petitioner to cure the defect. Therefore, the order rejecting the petitioner's application for change of place of business was wholly illegal and, cannot be sustained.

Ex parte provisional assessment order passed - no notices were served - Respondent contended that proper service was made by refusal as well as by affixation and there was no illegality in the service of the summons. Also the petitioner has a remedy of filing an appeal against the assessment orders .....

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e 72 of the Rules. Rule 72 of the Rules has been ignored and a procedure which is not known to law has been adopted.

Rule 72(a) of the Rules provides that the service of summons is required to be made on a dealer or a person concerned in person or his agent. Here, the report of process server indicates that there was no Firm at the Noida address. At the Ghaziabad address, the process server met one person, who refused to divulge his name but clearly indicated as to which person would .....

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of summons outside his territorial jurisdiction. Territorial jurisdiction of the Assessing Authority was Noida. Ghaziabad was outside his territorial jurisdiction. Thus, the Assessing Authority could not serve the summons to the petitioner at Ghaziabad address through or his process server. The Assessing Authority was required to adopt the procedure as per clause (j) and (k) of Rule 72 of the Rules, which in the instant case was not followed. Under this sub clause, the Assessing Authority is req .....

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w that the petitioner had shifted his place of business and there was no one at the Noida address. The respondents have not come with a stand that the petitioner is simultaneously carrying on his business at Noida as well as at Ghaziabad. In fact, the respondents admit that the petitioner has shifted his place of business from Noida to Ghaziabad.

There is another aspect, that clause (h) of Rule 72 of the Rules has not been followed which requires the summons to be sent by registered .....

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s found that pursuant to the ex-parte assessment orders, a sum of ₹ 49.82 crores was realized after attaching the bank account which included the admitted amount of ₹ 3.3 crores. Therefore, the petitioner's application could not be rejected on the ground that the admitted tax of ₹ 3.3 crores was not deposited by the petitioner. Once the amount has been realized, it was not open to the petitioner to deposit any further amount. Consequently, the order rejecting the recall applica .....

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on 32 of the Vat Act being wholly erroneous is also quashed. The order rejecting the petitioner's application for change of place of business filed under Section 75 of the Vat Act read with Rule 33 of the Rules being wholly illegal is also quashed. - Decided in favour of petitioners - Civil Misc.Writ Petition No. 80 of 2016, Civil Misc. Writ Petition No. 168 of 2016 - Dated:- 29-2-2016 - Tarun Agarwala and Vinod Kumar Misra, JJ. (Per: Tarun Agarwala, J.) 1. The petitioner is a company incorporat .....

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ted in the application form that the other address of the petitioner is in Banglore in the State of Karnataka. On 05.12.2013, the petitioner applied for change of principal place of business from Cabin No.2, First Floor, G-50, Sector-3, Noida to D-510-513, Buffer Godown Compound, Devi Mandir Road, Dasna, Ghaziabad-201001 and requested the registering authority to amend the registration certificate accordingly. The petitioner contends that while applying for change of place of business, the petit .....

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by the petitioner were allowed by orders dated 31.01.2015, 20.02.2015 and 30.05.2015. The assessment orders were set aside and the matter was remitted to the assessing authority to pass a fresh assessment order. The assessment proceedings for the aforesaid years is still pending consideration. The assessment orders were set aside on the ground that the petitioner had no notice of the assessment proceedings, inasmuch as their principal place of business had changed and that the summons were sent .....

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and the assessment orders have been set aside, the amount has not been refunded till date. 4. The petitioner received garnishee notices for recovery of ₹ 49,82,01,250/-. The petitioner being aggrieved by the method in which huge sums of money were being withdrawn by the respondents in such cavalier fashion by making ex-parte orders without giving due notice filed the present Civil Misc. Writ Petition No. 80 of 2006 questioning the action of the respondents in attaching the petitioner's .....

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nd Central Sales Tax Act for the months of April to October, 2015 as well as the order dated 11.02.2016 by which the petitioner's recall application was rejected. The petitioner in this writ petition also prayed for the quashing of the order dated 02.09.2014, by which their application for change of place of business was rejected. 5. Since counter had already been filed in writ petition no. 80 of 2016 and no disputed facts were brought on record in writ petition no. 168 of 2016, the Court he .....

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that the application for change of place of business was filed after 11 months on 05.12.2013. The impugned order further indicates that the petitioner did not give details of closure of its business at Noida nor filed the filing fee of ₹ 20/-. 8. The ground urged by the petitioner is that no opportunity of hearing was provided. The impugned order is violative of Section 75 of the Vat Act read with Rule 33(1) and (3) of the U.P.Value Added Tax Rules (hereinafter referred to as the Rules ). .....

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order was served by affixation at the Noida address. Further, Section 75 read with Rule 33 of the Rules has no application, inasmuch as in the instant case since change of place of business in effect changes the jurisdiction of the assessing authority it becomes necessary to follow the procedure prescribed under Rule 6 of the Rules, especially Rule 6 (8) for which purpose previous written permission of the Commissioner is required. It was urged that since no previous permission was taken, the ap .....

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.......... (14)The registering authority, after considering any information furnished or otherwise received and after making such inquiry as it may deem fit, amend from time to time any certificate of registration which shall take effect: (a) in the case of change in the name, ownership or place of business, or opening of a new place of business, from the date of the event necessitating the amendment whether or not information in that behalf is furnished within the time prescribed under section .....

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om the date of order of deletion. Provided that where in consequence of a change in the ownership of a business, liability for payment of tax of any dealer ceases, the amendment of the certificate of registration shall take effect from the date on which information in respect of such change is furnished under section 75. Explanation (I) - Any amendment of a certificate of registration under this sub7 section shall be without prejudice to any liability for tax or penalty imposable under this Act. .....

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nership business with all or any of the coparceners as partners thereof, (f) is proprietor of a business and such business is succeeded by successor or successors of its proprietor on account of disability or death of such proprietor. then merely by reason of any of the circumstances aforesaid, it shall not be necessary for the dealer or the firm the constitution whereof is changed, or the new trustees, or the new guardian or, the partners of such partnership business or successor or successors, .....

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id form indicates that in Column No.6 the petitioner is required to indicate the principal place of business. For change of place of business, the dealer is required to apply in Form No.XII. Section 17(14) of the Act read with Rule 33 of the Rules requires the registering authority to make an enquiry on the correctness of the information given as it may deem fit and after due enquiry at the business premises amend the certificate of registration, which shall take effect from the date of necessit .....

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ler to whom the provisions of sections 17 and 18 apply:- (a) transfers his business or any part thereof by sale, lease, leave,license, hire or in any other manner whatsoever, or otherwise disposes of his business or any part thereof; or (b) acquires any business, whether by purchase or otherwise; or (c) effects or comes to know of any other change in the ownership or constitution of his business; or (d) discontinues his business or changes his place of business or warehouse or opens a new place .....

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tution of Board of Directors; or (i) effects any change in the particulars furnished in application for grant of registration certificate under section 17, he shall within thirty days of the occurring of any of the events aforesaid, inform the registering authority in the form and manner, as may be prescribed. 13. A perusal of Section 75 (d) of the Vat Act indicates that where a dealer changes his place of business he shall inform the registering authority in the form and manner as prescribed wi .....

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under sub-rule (1) shall accompany the registration certificate and evidence regarding change of business. (3) On receiving the information referred to in subrule( 1) the registering authority or the assessing authority, as the case may be, shall verify the correctness of information and after making such enquiry as he may deem fit, including enquiry at business premises , pass appropriate order and make necessary amendment in relevant records including registration certificate as far as possibl .....

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n certificate within a period of 30 days. For facility, Form No.XII is extracted hereunder: List of events: (a) Transfers his business or any part thereof by sale, lease, leave, license, hire or in any other manner whatsoever, or otherwise disposes of his business or any part thereof; or (b) Acquires any business, whether by purchase or otherwise; or (c) Effects or comes to know of any other change in the ownership or Constitution of his business; or (d) Discontinues his business or changes his .....

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ted under a statute effects any change in the constitution of Board of Directors; or (i) Effects any change in the particulars furnished in application for grant of registration certificate under sec-17. Details of annexures: 1. Registration Certificate.(Form-XI) 2. Proof of the occurrence of the event to the satisfaction of Registering Officer. 3. Form VII/VII-G duly filled along with required annexures. 4. Undertaking from sureties for treating Security furnished earlier valid for the purpose .....

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ealer other than a casual dealer carries on business within the limits of jurisdiction of more than one Assistant Commissioner he shall, within thirty days of the commencement of business, declare one of the places of his business as his principal place of business in Uttar Pradesh and shall intimate all the Assistant Commissioners within whose limits of jurisdiction his places of business are situated. The Assistant Commissioner within whose limits of jurisdiction the principal place of busines .....

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ent, Company, Corporation, undertaking, Board and Federation is carrying on business shall be the assessing authority in respect of the place or places of business within the limits of his jurisdiction,or permit such Department, Company, Corporation, undertaking, Board and Federation to declare one place of business as the principal place of business in Uttar Pradesh in which case the Assistant Commissioner, within whose limits of jurisdiction such declared principal place of business is situate .....

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pal place of business of a dealer other than a casual dealer is situated outside Uttar Pradesh and such dealer carries on business at more than one place in Uttar Pradesh, he shall declare one of his places of business in Uttar Pradesh, as the principal place of business in Uttar Pradesh, within thirty days of commencement of business and shall intimate all the Assistant Commissioners within whose limits of jurisdiction his places of business are situated. The Assistant Commissioner within whose .....

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ecision shall be final. (6) If a dealer has no fixed place of business, the Assistant Commissioner within whose limits of jurisdiction he ordinarily resides shall be the assessing authority in respect of such dealer. (7) In a case in which the driver or person-in charge of a vehicle carrying goods referred to in sub-section (1) of section 50, with the documents referred to in rule 58 to carry such goods out side the State and is found not to carry such goods outside the State, the Commissioner s .....

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bt or if any of the sub-rules of this rule do not apply, the commissioner shall determine the Assistant Commissioner who will be the assessing authority in respect of a dealer, and his decision shall be final. (10) Notwithstanding anything contained in any other sub-rule, in a case in which any dealer affects a change in his place of business on any day after the first day of an assessment year and as a result of which there are more than one assessing authorities for single assessment year, the .....

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er service provider or an owner or person in charge of warehouse, cold storage or go-down within the State. 15. Rule 6(1) provides that if a dealer carries on a business within the limits of a Assistant Commissioner, that Officer would become the assessing authority in respect of that dealer and the place where he carries on the business shall be deemed to be his principal place of business. Clause (2) of Rule 6 provides that where a dealer has more than two places of business, which are within .....

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(2) or (4) of Rule 6, in which case, the Commissioner or any Officer authorized by him shall determine as to who would be the assessing authority of the dealer. Sub-rule (8) of Rule 6 on which the respondents are relying upon is that a dealer, who has made a declaration under the above sub-rules would be allowed to change his declaration, namely, the principal place of business only with the previous written permission of the Commissioner. 16. Relying upon Rule 6(8) of the Rules, the respondents .....

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) of the Rules. 17. The contention of the learned counsel for the respondents is patently misconceived. Rule 6 of the Rules has no application in the instant case. The application for change of place of business was rightly filed by the petitioner under Section 75 of the Vat Act read with Rule 33 of the Rules in Form No. XII. The petitioner filed the application for amendment of his registration certificate, which it applied under Form No. VII and registration was granted. Column no.6 of Form No .....

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pondents that the information given by the petitioner could only be amended pursuant to a written permission from the Commissioner under Rule 6 (8) is patently misconceived, inasmuch as the declaration given by a dealer under Rule 6 (2) and Rule 6(4) is only given in the eventuality where a dealer has more than one place of business in the State of U.P. and therefore, it becomes necessary for the dealer to specify his principal place of business in order for the respondents to fix the assessing .....

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ch requires written permission of the Commissioner was not required to be done by the petitioner. Rule 6 (8) has no application in the instant case and could not be relied upon by the respondents. The ground for rejecting the application for change of place of business on the ground that the application was filed belatedly is patently erroneous. The registering authority has not considered the provisions of Section 17 (14) (a) of the Vat Act, which makes it obligatory upon the registering author .....

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Act is not mandatory and is directory in view of section 17 (14) (a) of the Vat Act. We further find that the petitioner's application on the ground of nonfurnishing ₹ 20/- as filing fees was not an incurable defect and that the same could have been cured. The registering authority could not reject the petitioner's application on this ground and should have allowed the petitioner to cure the defect. In view of the aforesaid, the order dated 02.09.2014 rejecting the petitioner' .....

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ent the notices and affixed the same as well as the demand notices at the Noida address and made no attempt to serve the petitioner at the Ghaziabad address. The petitioner has also questioned the assessment orders on the ground that the assessing authority had no jurisdiction to make any assessment, which was outside his territorial jurisdiction. 21. In the counter affidavit the respondents admit that the earlier assessment orders for the assessment years 2011-12, 2013-14 and 2014- 15 were set .....

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he summons was attempted at the Ghaziabad address and the process server records a note that one person who refused to divulge his name and who refused to receive the notices indicated that one Bishnoi who is not present at the moment would receive the notice. The counter affidavit further reveals that on 09.12.2015 the summons were served by affixation at Noida. The summons indicated that the date of hearing was 10.12.2015. The assessment order indicates that the first and last date of hearing .....

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ed that the petitioner has a remedy of filing an appeal against the assessment orders and that it was not necessary to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. 23. Having heard the learned counsel for the parties, we are of the opinion that the rule of alternative remedy is not a bar for entertaining the writ petition. No doubt it is a rule of discretion but in the instant case, we are of the opinion that there would be a travesty of jus .....

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mmons or order under the Act or the Rules may be affected by any of the following methods, namely: (a) Service to be on dealer or person concerned in person when practicable, or on his agent- Wherever it is practicable service shall be made on the dealer or person concerned in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient. (b) Service on agent by whom dealer or person concerned carries on business- In a case relating to any bu .....

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n the service of notice, summons or order is sought to be effected at his residence and there is no likelihood of his being found at the residence within a reasonable time and he has no agent empowered to accept service of the notice, summons or order on his behalf, service may be made on any adult member of the family, whether male or female, who is residing with him. Explanation- A servant is not a member of the family within the meaning of this rule. (d) Person served to sign acknowledgement- .....

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n as aforesaid refuses to sign the acknowledgement, or where the process server, after using all due and reasonable diligence, cannot find the dealer or person concerned who is absent from his place of business or residence at the time when service is sought to be effected on him and there is no likelihood of his being found within a reasonable time and there is no agent empowered to accept service of the notice or order or summons on his behalf, nor any other person on whom service can be made, .....

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ny) by whom the house was identified and in whose presence the copy was affixed. (f) Endorsement of time and manner of service- The process server shall, in all cases in which the notice, order or summons has been served under clause (d), endorse or annex, or cause to be endorsed or annexed, on or to the original notice, order or summons, a return stating the time when and the manner in which the notice, order or summons was served, and the name and address of the person (if any) identifying the .....

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as it thinks fit: and shall either declare that the notice, order or summons has been duly served or order such service as it thinks fit. (h) Simultaneous issue of notice or order or summon for service by post in addition to personal service- (i) The authority shall, in addition to, and simultaneously with, the issue of notice, order or summons for service in the manner provided under this rule, also direct the notice, order or summons to be served by registered post, acknowledgement due, addres .....

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singed by the dealer or person concerned or his agent is received by the authority or the postal article containing the notice, order or summons is received back by the authority with an endorsement purporting to have been made by a postal employee to the effect that the dealer or person concerned or his agent had refused to take delivery of the postal article containing the notice, order or summons, when tendered to him, the authority issuing the notice, order or summons shall declare that the .....

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ice- (i) Where the authority is satisfied that there is reason to believe that the dealer or person concerned is keeping out of the way for the purpose of avoiding service, or that for any other reason the notice, order or summons cannot be served in the ordinary way, the authority shall order the notice, order or summons to be served by affixing a copy thereof in some conspicuous place in the office premises, and also upon some conspicuous part of the house (if any) in which the dealer or perso .....

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ice;- Service substituted by the order of authority shall be as effectual as if it had been made on the dealer or concerned person. (iv) Time for appearance to be fixed;- Where service is substituted by the order of authority, the authority shall fix such time for the appearance of the dealer or the concerned person as the case may require. (j) Service of notice, order or summon where the dealer or person concerned resides within the jurisdiction of another authority- A notice, order or summons .....

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s to the issuing authority, together with the record (if any) of its proceedings with regard thereto. (l) Service on dealer or person concerned in prison- Where the dealer or person concerned is confined in a prison, the notice, order or summons shall be delivered or sent by post or otherwise to the officer in charge of the prison for service on the dealer or person concerned. (m) Service on civil public officer or on servant of railway or local authority- Where person concerned is a public offi .....

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ns is delivered or sent to any person for service under clause (l) or (m) above, such person shall be bound to serve it if possible, and to return it under his signature, with the written acknowledgement of the dealer or person concerned, and such signature shall be deemed to be evidence of service. (ii) Where for any reason service is impossible, the notice, order or summons shall be returned to the authority with a full statement of such reason and of the steps taken to procure service, and su .....

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otice, order or summons, and, subject to the provisions of sub clause (iii), shall be treated in all respects as a notice, order or summons. (iii) A letter so substituted may be sent to the dealer or person concerned by post or by a special messenger selected by the authority, or in any other manner which the authority thinks fit; and, where the dealer or the concerned person has an agent empowered to accept service, the letter may be delivered or sent to such agent. 24. Rule 72(a) of the Rules .....

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illegal. There is no finding that the person who refused to accept the notice was a dealer or a person concerned in person or an agent empowered to accept the notice. In the absence of any report to this effect we are of the opinion that there is no valid service by refusal. 25. Admittedly, the Assessing Authority has no jurisdiction to effect service of summons outside his territorial jurisdiction. Territorial jurisdiction of the Assessing Authority was Noida. Ghaziabad was outside his territo .....

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effected. On this ground also, we hold that there is no proper service of the summons at the Ghaziabad address. 26. We also find that the affixation made under clause (e) of Rule 72 of the Rules was done at Noida address. This affixation at Noida was patently illegal and could not be held to be a proper notice by affixation, inasmuch as the respondents knew that the petitioner had shifted his place of business and there was no one at the Noida address. The respondents have not come with a stand .....

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is nothing to indicate that the assessing authority had dispensed with the service of summons by registered post. 28. In the light of the aforesaid, it is apparently clear that there was no valid service of summons and consequently, ex-parte proceedings were taken based on which ex-parte assessment orders were passed which can not be sustained and are liable to be quashed. Consequently, it is not necessary for us to go into the question as to whether the Assessing Authority at Noida had the terr .....

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the ground that the admitted tax of ₹ 3.3 crore was not deposited which is a mandatory requirement as per Section 32 of the Act. On this issue, we are of the opinion that Assessing Authority committed a manifest error in rejecting the recall application. For facility, section 32 is extracted hereunder:- 32.Power to set aside ex-parte order of assessment or penalty.- (1) In any case in which an order of assessment or re-assessment or rejection of application for registration or order of pen .....

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y satisfactory proof of the payment of the amount of tax to be due under this Act on the turnover of sales or purchases, or both, as the case may be, admitted by the dealer in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater. (2) Where an assessment order under subsection (1) of section 25 is passed, exparte, the dealer may apply to the Assessing Authority within thirty days of the service of the order, to set aside such order and if such authority .....

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rder, passed by the Appellate Authority under section 55, has been confirmed; and (c) Commissioner or Additional Commissioner designated by the Commissioner, after giving reasonable opportunity of being heard to the dealer, is satisfied that- (i) dealer, at any stage during the period of assessment or reassessment proceedings, had no notice of initiation of such proceedings; (ii) as a result of ex parte assessment or reassessment, without proper basis amount of tax has been levied; (iii) undue h .....

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lication before the Commissioner within a period of sixty days from the date on which dealer receives the order passed by the Tribunal under section 57. 30. The said provision requires the recall application to be filed within 30 days of the order on the application for setting aside the ex-parte assessment order, which could only be entertained if it is supported by proof of deposit of the admitted tax by the dealer. In the instant case, we find that the assessment orders were served by affixat .....

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dge about the assessment orders which in the instant case was lacking. 31. We also find that pursuant to the ex-parte assessment orders, a sum of ₹ 49.82 crores was realized after attaching the bank account which included the admitted amount of ₹ 3.3 crores. Therefore, the petitioner's application could not be rejected on the ground that the admitted tax of ₹ 3.3 crores was not deposited by the petitioner. Once the amount has been realized, it was not open to the petitioner .....

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of the amount of ₹ 49,82,01,250/- being wholly illegal and without any authority of law are also quashed. The order dated 11.02.2016 rejecting the recall application filed under Section 32 of the Vat Act being wholly erroneous is also quashed. The order dated 02.09.2014 rejecting the petitioner's application for change of place of business filed under Section 75 of the Vat Act read with Rule 33 of the Rules being wholly illegal is also quashed. 33. The Registering Authority is directed .....

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y authority of law, the respondents are not justified to retain this amount any further. We, accordingly, direct the Deputy Commissioner of Commercial Tax, Grade-II, Sector-2, Noida, respondent no. 3, to refund the amount of ₹ 49,82,01,250/- along with interest as per section 40 of the U.P. VAT Act after adjusting the admitted tax of the petitioner within two weeks from the date of production of a certified copy of this order. Since we have quashed the assessment orders, it would be open t .....

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Before parting, we must observe the manner in which the respondents have proceeded with the assessment and recovered the amount from the petitioner's Bank account in haste is deplorable and in gross violation of the provisions of the Act. We find that for the assessment years 2011-12, 2013-14 and 2014-15 ex-parte assessment orders were made without adequate service of notices upon the petitioner. These assessment proceedings were set aside in appeal on the short ground that the service of t .....

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a futile attempt to serve the notice at Ghaziabad but later for the reasons best known to them, chose deliberately to serve the notice by affixation at the Noida address. Such tactics adopted by the assessing authority in getting the service effected upon the petitioner was in gross violation of Rule 72 of the Rules. 36. We also find that the entire exercise of service was done within four days without taking recourse to the other mode of service, namely simultaneously service by registered post .....

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