M/S Sony India Pvt. Ltd. vs State Of U.P. And 3 Ors.
2014 Latest Caselaw 1326 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 21
 

 
Case :- WRIT TAX No. - 187 of 2014
 

 
Petitioner :- M/S Sony India Pvt. Ltd.
 
Respondent :- State Of U.P. And 3 Ors.
 
Counsel for Petitioner :- Gaurav Mahajan,Amit Mahajan
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Krishna Murari,J.

Hon'ble Vivek Kumar Birla,J.

(Delivered by Hon'ble Krishna Murari, J.)

The petitioner a private limited company incorporated under the provision of the Indian Companies Act and registered under the provision of U.P. Value Added Tax, 2008 (in short the 'Act') and Central Sales Tax Act, 1956 has approached this Court seeking the following reliefs :

"(1) Issue a writ, order or direction in the nature of mandamus commanding the Respondent no. 3/Respondent no. 4 to provide copies to the petitioner of documents seized by the Respondent No. 3 after invoking the provisions of Section 45 of the U.P. Vat Act, 2008 during the survey conducted on 30-07-2013 and 31-07-2013 by the S.i.B. Authorities at the warehouse of the petitioner situated at 24-A, Echo Tech-2, Udyog Vihar, Greater Noida, Gautam Budh Nagar, U.P. and also to provide/give a copy of the survey report so prepared.

(2) Issue a writ, order or direction in the nature of mandamus commanding the Respondent No. 4 not to complete the assessment of the A/Y ? 2011-12 without providing copies of the documents being relied upon by him to the petitioner and giving appropriate time to the petitioner to file an appropriate explanation.

(3) Issue any other writ, order or direction which this Hon'ble Court deems fit in the facts and circumstances of the case."

The above reliefs have been claimed by the petitioner in the backdrop of the following facts :

The Special Investigation Branch (S.I.B) of the Commercial Tax Department of State, which is under the supervision and control of the Deputy Commissioner (S.I.B), Commercial Tax, the respondent no. 3 conducted a survey at the warehouse of the petitioner. The team invoking the provision of Section 45 of the Act seized various records of the petitioner company including register, documents etc. After survey and seizure of the documents, show cause notice was issued to the petitioner. According to the pleadings of the petitioner, time allowed in the show cause notice of 3 days was very short, still the Company appeared on each and every date fixed and made necessary compliance to the extent possible. Another notice no. 325 dated 22-09-2013 under Section 45(10) of the Act was issued requiring the petitioner to appear on 30-09-2013 at 11 am along with books of account, balance sheet, Bank statement and other documents. The petitioner claimed that he apepared on the date fixed before respondent no. 3 and submitted a reply dated 30-09-2013 explaining chronologically compliance made in response to the various earlier notices as also the documents submitted in reply to the said notice. The petitioner again vide letter dated 06-12-2013 made a specific request to the respondent no. 3 to return the seized documents taken away at the time of survey. Respondent no. 3 replied to the said letter stating that the report of the survey has been handed to the respondent no. 4/Joint Commissioner (Corporate Circle), Commercial Tax, Noida and in future correspondence in this regard be made with him. The petitioner vide letter dated 30-01-2014 requested the respondent no. 4 for providing the copies of documents seized during survey. Another letter dated 22-02-2014 was again addressed to the respondent no. 3 for supplying the copies of documents seized during survey. It was pointed out in the said letter that since assessment proceedings are going on and the seized documents and the survey report are being relied upon by the respondent no. 3, as such, it was expedient and necessary that the petitioner be given the copies of the documents seized so as to enable it to give appropriate explanation and submit an effective reply.

According to the petitioner, instead of supplying the copies of documents seized, another notice no. 473 dated 05-03-2014 was issued by respondent no. 4. The petitioner again made similar request vide letter dated 13.03.2014 for supply of the copies of the documents seized. A further request was made that assessment proceedings for the financial year 2011-12 should be kept in abeyance till the time the relevant copies of the documents are provided and a reasonable opprortunity to submit a reply is provided. The petitioner also claims that it has submitted a reply to the show cause notice dated 05-03-2014 on 14-03-2014 wherein again a request was made to supply the copies of the documents seized.

We have heard Sri S.D.Singh, learned Senior Advocate assisted by Sri Gaurav Mahajan and Sri Amit Mahajan for the petitioner and Sri A.C.Tripathi for the revenue.

Sri S.D.Singh, learned Senior Advocate submitted that despite repeated requests by the petitioner, the copies of the documents seized have not been provided and for want of the documents, the petitioner has not been able to submit an effective reply to the show cause notice though whatever material was available with the petitioner a reply to all the show cause notices has been submitted and having failed in its attempt, the instant writ petition has been filed. It is also submitted that non-supply of the documents and forcing it to submit reply to the show cause notice without aid of the documents which are being relied upon will lead to violation of its right and will also be contrary to the principle of natural justice.

In reply, Sri A.C.Tripathi, on the basis of instruction received, submitted that during survey, stock of imported items found in the warehouse was much more than the declared and it was also found that various transaction for huge amount was made on Form No. 38 bearing same serial number and it transpired that more than one copy of the same Form-38 was generated for importing the goods with an intention of evading the tax. Sri Tripathi further submitted that there is absolutely no difficulty in providing the copies of the documents seized during survey provided the petitioner first produces the original books of account before the authority concerned for verification so that after receiving the copies of the documents seized during survey, no manipulation or entries are made in the books of account to adjust the difference. He further states that once the original books of account are produced before the authority concerned for verification, the copy of the seized documents shall be provided to the petitioner. Learned counsel for the respondent referring to the notice dated 05-03-2014 (annexure-8 to the writ petition) has pointed out that it was found that in the month of July, 2011 same Form No. 38 has been used twice on account of which there was a difference of sum of Rs.15,85,03,552/-. He also submitted at the time of survey, various blank copies of downloaded form generated more than three months before were found at the business premises whereas in fact, they were required to be cancelled for non-use and submitted with the department. It was also submitted that huge difference was detected in the sale and purchase record.

Sri S.D.Singh referring to the averments made in the reply of the petitioner to the show cause has tried to explain before us in respect of allegation made with respect to multiple use of same Form No. 38. However, at this stage we are not concerned with the merits of the allegations made against the petitioner or reply submitted by it. The scope of this writ petition is only confined to issue as to whether the petitioner is entitled to receive the copies of the documents seized so as to enable it to submit an effective reply.

A show cause notice is issued on the basis of uncontested material available before the Assessing Authority, who based thereon, has arrived at a prima facie finding whether a show cause notice ought to be issued or not. The material, thus, which has to be considered is, untested and uncorroborated. A party is called upon to reply to the said show cause notice in order to enable the Revenue to know the stand of the asessee, in the context of the material produced as to whether the proceedings should be further proceeded with. It is an opportunity to the party being proceeded against to disclose any material that the party may have to rebut the prima facie opinion.

Thus the assessee has a right to have the material which the revenue has relied upon to arrive at a prima-facie opinion that proceedings should be further proceeded. The question, therefore, of an assessee being entitled to have the copies of the documents being relied upon by the revenue, particularly when the said documents have been seized from its possession, has to be answered in affirmative.

The test of reasonableness and the principles of natural justice also require that if assessee is put to notice he must know about the material being relied upon by the revenue to give an effective reply.

The Statutory Authority under the Act exercises quasi judicial functions under the provisions of the Act. In the event a finding as regards violation of the provisions of the Act is arrived at by the revenue, several steps resulting in civil or evil consequences visit the assesee. The principles of natural justice are required to be complied with. In the case of Banaras Hindu University vs. Srikant, (2006) 11 SCC 200, the Hon'ble Apex Court has observed as under :

"An order passed by a Statutory Authority, particularly when by reason whereof a citizen of India would be visited with civil or evil consequences must meet the test of reasonableness. "

In Kothari Filaments v. Commissioner of Custos, (2009) 2 SCC 192 while considering the question whether the Assessee was denied access to documents relied upon in show cause notice for misdeclaration and duty evasion after confiscation of imported goods, the Apex Court held that Commissioner of Customs could not have passed the order on the basis of materials which were either known only to Custom Authorities, copies whereof were not suplied to the assessee or inspection thereto had not been given".

In paragraph 15 of the said report, it has been observed as under :

"The Act does not prohibit application of the principles of natural justice. The Commissioner of Customs either could not have passed the order on the basis of the materials which were known only to them, copies whereof were not supplied or inspection thereto had not been given. He, thus, could not have averted to the report of the overseas enquiries. A person charged with misdeclaration is entitled to know the ground on the basis whereof he would be penalised. He may have an answere to the charges or may not have. But there cannot be any doubt whatsoever that in law he is entitled to a proper hearing which would include supply of the documents. Only on knowing the contents of the documents, he could furnish an effective reply. "

In view of aforementioned settled legal principles, there cannot be any doubt whatsoever that principles of natural justice have to be followed and the petitioner is entitled for supply of copies of documents being relied upon by the revenue or at least an inspection thereof.

However, the apprehension being expressed by the revenue regarding manipulation in books of account by the petitioner after getting the documents seized also cannot be said to be without any basis.

While adhering to the legal principles, the Court has also to adjust the equities on both sides.

A reasonable and pragmatic solution to the problem, in our view, is to direct the petitioner to produce the account books and other relevant documents before the authority who may verify the same or obtain copies thereof as he may deem fit and thereafter supply the copy of the documents being relied upon by the revenue. The petitioner after receiving the copies of the documents may file its reply to the notice and thereafter the proceeding may be undertaken in accordance with law.

In such view of the matter, writ petition stands disposed of with the following directions :

Petitioner may produce books of account and other related documents before the authority within 15 days from receipt of certified copy of this order. The authority may verify the documents so produced or obtain copy thereof as it may deem fit and shall thereafter supply the copies of documents, being relied upon by the revenue, to the petitioner within a week. The petitioner after receiving the copies of documents may file a reply to the show cause notice within 15 days, and the proceedings may be undertaken thereafter in accordance with law. However, in case the petitioner fails to produce the documents within a period of 15 days time, the authority shall be free to proceed with the matter as per the provision of the Act and procedure prescribed.

Order Date :- 29.4.2014

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