Allahabad High Court
M/S O.P. Chains Ltd. vs State Of U.P. & Others on 22 May, 2014
Bench: Tarun Agarwala, Bachchoo Lal
HIGH COURT OF JUDICATURE AT ALLAHABAD
A F R
Court No. - 33
Case :- WRIT TAX No. - 2171 of 2009
Petitioner :- M/S O.P. Chains Ltd.
Respondent :- State Of U.P. & Others
Counsel for Petitioner :- Parv Agarwal,Bharat Ji Agarwal
Counsel for Respondent :- C.S.C.
Hon'ble Tarun Agarwala,J.
Hon'ble Bachchoo Lal,J.
The petitioner is registered under the U.P. Trade Tax Act now under the VAT Act and is also registered under the Central Sales Tax Act and is carrying on the business of purchase and sale of bullion. In the normal course of business, the petitioner is maintaining its books of accounts and documents in accordance with the provisions of Section 21 and 22 of the U.P. VAT Act which includes cash book, ledger, purchase and sales register, tax invoices, sales invoice, sales memo, etc. According to the petitioner, whenever the company sells its goods to a registered dealer, a tax invoice is issued and whenever goods are sold to an unregistered dealer, a sales invoice is issued as per the provision of Section 22 of the U.P. Vat Act read with Rule 44 of the
U.P. Vat Rules indicating therein the complete name and address of the seller. However, while issuing a cash memo to an individual it is not necessary to indicate the name and address of the purchaser on the cash memo.
It transpires that a survey was made at the premises pursuant to which a survey report dated 29.1.2009 was submitted. According to the petitioner nothing incriminating was found in the said survey inasmuch as the entire records were found to be duly recorded and the books of accounts was found to be duly computerized and all entries were found to be recorded. It was contended that even in the survey report it was recorded that a tax invoice was issued when a sale was made to a registered dealer and a sales invoice was issued whenever a sale was made to an unregistered dealer and that no name or address of the purchaser was recorded when a sale was made to an individual in the cash memo.
Based on this survey report, the authority issued a notice under Section 45 (10) of the Act directing the dealer to show cause why an adverse inference should not be drawn on the basis of non furnishing of the names and address of the purchasers in the cash memo. The petitioner submitted a reply contending that under law the petitioner was not required to give the name and address of the purchaser in the cash memo as it was only a petty sale.
It transpires that the authorities, namely, the Additional Commissioner submitted a report to the Deputy Commissioner opining that in the light of the stand of the petitioner and the provision of the Act and the Rules famed therein, the provisions of Section 54 (5) of the U.P. Vat Act relating to penalty did not arise. Inspite of this report being submitted, the Deputy Commissioner (Assessment), respondent No.2 issued notices dated 30th October, 2009 under Section 54 (1) (22) of the Act directing the petitioner to show cause as to why penalty should not be imposed for contravening the provisions of the Act and Rules made thereunder. The ground indicated in the notice is, that since a very high percentage of sales was shown through cash memos ranging from Rs. 50 lacs to Rs. one crore, the sale, being more than Rs. 5 lacs, there is a presumption that the sale was made to a "dealer" and consequently there was an avoidance of tax under the U.P. Vat Act. Further, since the names and address of the purchasing dealer was not indicated in the cash memos, there was a direct contravention of Rule 22 (3) (b) of the Act.
The petitioners, being aggrieved by the issuance of these notices, has filed the present writ petition praying for a writ of prohibition prohibiting the Deputy Commissioner Assistant from proceeding in the imposition of penalty pursuant to the notices dated 30th October, 2009. The petitioner has also prayed for a writ of certiorari for the quashing of these notices.
We have heard Sri Bharat Ji Agrawal the learned senior counsel assisted by Sri Parv Agrawal and Sri C.P. Tripathi the special counsel for the State at length.
The learned senior counsel submitted that the period in question is April 2008 to December, 2008 and, as per the provision of Section 22 (3) (b) of the Act read over Rule 45 of the U.P. Vat Rules as existing at that time, there was no requirement of indicating the name and address of the purchaser in the cash memo. Consequently, the entire exercise initiated by the Deputy Commissioner for imposition of penalty was an unnecessary exercise amounting to harassment of the petitioner at the hands of the authority. Consequently a writ of prohibition was filed to prevent the authority from proceeding in the matter. The learned counsel submitted that under law, namely, Section 22 (3) (b) of the Act read with rule 45 of the Rules the requirement to mention the name and address of the purchaser was only with regard to issuance of tax invoice or a sales invoice and that there was no such requirement to mention the names and address of the purchaser in the cash memos.
In order to appreciate the submission of the learned senior counsel, it would be appropriate to refer to Section 22 (3) (b) and Rule 44 (2) and Rule 44 (6) which are extracted here under:
"Sec 22 (3) Every registered dealer, who is liable for payment of tax on sale of any-
(a) Non-vat goods and who realizes tax from the purchaser, shall, while, making sale of such goods issue to the purchaser, a sale invoice in the prescribed manner containing such particulars as may be prescribed, and shall charge separately on such sale invoice the amount of tax; or
(b) Taxable goods except non vat goods and makes sale of such goods to a dealer other than a registered dealer, shall, while making sale of such goods to such dealer, issue a sale invoice after mentioning name, complete address f the purchasing dealer and such other particulars as may be prescribed.
(4) Subject to provisions of sub-section (1) and sub-section (3), every taxable dealer shall, in
respect of sale of all goods, where-
(i) sale value of single sale exceeds the amount prescribed in this behalf; or
(ii) purchaser of goods demands a cash memo or bill; or
(iii) any other law prescribes for issue of a bill or cash memo in respect of sale of any goods; or
(iv) selling dealer as a practice issues a bill or cash memo in respect of sales made by him, issue to the purchaser a bill or cash, memo in the prescribed manner containing such particulars as may be prescribed."
"Rule 44 (2) Sale invoice:- Sale invoice, to be issued under clause (a) of subsection (3) of section 22 in respect of sale of any non vat goods, shall contain name and complete address of the selling dealer, name and address of breach or depot from where goods are sold, Taxpayer Identification Number of selling dealer, sale invoice book number, sale invoice serial no., date of issue, name and address of the purchaser, Taxpayer Identification Number of purchase, if any, description of goods, quantity or measure of goods, value of goods, other charges, if any rate of tax, amount of tax charged, total amount of sale invoice, such other details as the dealer consider necessary, if any, and signature of person issuing sale invoice:
Provided that where sales are made to any person other than a dealer, it shall not be necessary to mention name and address of the purchaser and Taxpayer's Identification Number of such purchaser.
"Rule 44 (6)
Cash Memo:- Cash memo referred to in sub-section (4) of section 22 shall contain name and complete address of the selling dealer, name and address of branch or depot, from where goods are sold Taxpayer's Identification Number of selling dealer, cash memo book number, cash memo serial no., date of issue, description of goods, quantity or measure of goods, value of goods, other charges, ifany, amount of discount, if any, total amount of cash memo, such other details as the dealer considers necessary, if any, and signature of person issuing cash memo.
To buttress his argument, the learned counsel submitted that the aforesaid Rules were amended in the year 2009 when it became mandatory to indicate the name and address of the purchaser even in the cash memo. Consequently, the learned senior counsel submitted that since there was no provision to indicate the name of the purchaser and his address in the cash memo, the assessing authority exceeded its jurisdiction in issuing the notices under Section 54 for imposition of penalty.
In support of his submission, the learned senior counsel placed reliance upon a division Bench decision of this Court in Dr. Gaurhari Singhania Vs. Wealth Tax Officer and others [1986 U.P.T.C.-114] on the issue that a writ of prohibition could be issued under Article 226 of the Constitution of India where such action of an authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment. The learned counsel also placed reliance upon a decision of the Supreme Court in AIR 1955 SC 661 Bengal Immunity Co. Ltd. Vs. State of Bihar and others where the Supreme Court held that writ of prohibition could be issued whenever a subordinate Court or Tribunal usurps jurisdiction which does not belong to it. The Supreme Court further held that when such usarpation is shown the issue of a writ of prohibition, though not of course, is a matter of right and not had discretionary.
The learned counsel also placed reliance upon a decision of the Supreme Court in Union of India Vs. Hindalco Industries (2003) 5 SCC 194 wherein the court held that if the authority had no jurisdiction or there was lack of jurisdiction, a writ of prohibition could be issued. Similarly in the case of Siemens Ltd. Vs. State of Maharashtra 2007 (207) E.L.T. 168 (S.C.) the Supreme Court held that the writ petition was maintainable against issuance of a show cause notice where it was found that notice so issued was with a pre-mediated mind, the Supreme Court held that the statutory authority having already formed its opinion, a writ could be issued restraining the said authority from proceeding in the matter.
In the light of the aforesaid decisions, Sri Bharat Ji Agrawal, the learned senior counsel submitted that a writ of prohibition is more of a preventive nature than as a corrective remedy and if it is established from the facts that the authority had no right to adjudicate upon the issue in question and had no jurisdiction to proceed in the matter, in such an eventuality a writ of prohibition could be issued and the impugned notices could be quashed by issuance of a writ of certiorari.
On the other hand, Sri Tripathi the Special Counsel for the State submitted that the authority had the jurisdiction to issue a notice and proceed under Section 54 of the Act since it found that the petitioner had made a violation of the provisions of the Act and the Rules. The learned counsel submitted that the perusal of the impugned notices clearly indicated that the petitioner had acted in collusion with the purchasing dealer by suppressing their identity, namely, their names and address of the purchasing dealer in order to facilitate evasion of tax on subsequent transactions. The reason for such presumption was that the quantum of sale indicated on a single cash memo as indicated in the impugned notices ranged from Rs. 50 lacs to Rs. one crore and such huge quantum shown in a single transaction which is more than Rs. five lacs itself shows that the buyer is a "dealer" within the meaning of Section 2 (h) of the Act and that the said purchaser was liable for registration under Section 17 read with Section 3 (4) of the
Act. Consequently, it was necessary for the petitioner to indicate the name of the buyer under Section 22 (3) (b) read with Section 45 of the Rules so that the loss of revenue was safeguarded.
Having heard the rival contention of the parties, we are of the opinion that a writ of prohibition can be issued to an authority from continuing with the proceeding on the ground that the proceeding is without jurisdiction or in excess of the jurisdiction conferred to it or is contrary to the laws of the land if the authority has no jurisdiction to proceed in the matter. A citizen including the petitioner is entitled to an issue of a writ of prohibition in order to save himself from unnecessary harassment at the hands of such authorities. However,such writs should be exercised with caution and in exceptional matter especially when it is found that the authority has usurped the jurisdiction of another authority or is acting without any authority of law.
In Thirumala Tirupathi Devasthanams and another Vs. Thallappaka Ananthacharyulu and others (2003) 8 SCC 134 the Supreme Court held as under:
"14. On the basis of the authorities it is clear that the Supreme Court and he High Courts have power to issue writs, including a writ or prohibition. A writ or prohibition is normally issued only when the inferior court or tribunal (a) proceeds to act without or in excess of jurisdiction, (b) proceeds to act in violation of the rules of natural justice, (C) proceeds to act under law which is itself ultra vires or unconstitutional, or (d) proceeds to act in contravention of fundamental rights. The principles, which govern the exercise of such power, must be strictly observed. A writ of prohibition must be issued only in rarest of rare cases. Judicial discipline of the highest order has to be exercised whilst issuing such writs."
In the instant case, the Court finds that the authority, namely, the Deputy Commissioner (Assessment) had the authority to issue a notice under Section 54 of the Act. The notice so issued was for the alleged violation of the provision of Section 22 (3) (b) of the Act. Whether or not the petitioner has violated the provision is a question of fact which can be easily explained by the petitioner before the authority concerned. Once the Court finds that the authority had the jurisdiction to issue a notice, the basis on which the writ of prohibition is sought for by the petitioner disappears. The prayer for the issue of a writ of prohibition restraining the authorities from proceeding in the matter is essentially based on the constitutional challenge that the authority had no jurisdiction in the matter. Once we have held that the authority had the jurisdiction to issue notice and proceed in the matter, the basis on which the writ of prohibition is sought by the petitioner disappears. This view was taken by the Supreme Court in Standard Chartered Bank and others Vs. Directorate of Enforcement and others (2006) 4 Supreme Court Cases 278.
In the instant case, the Court finds that it is not a case where the petitioner was being put to unnecessary harassment at the hands of the authority nor it is a case where a writ of prohibition should be issued because the authority had no jurisdiction to proceed in the matter. The submission of the learned counsel for the petitioner that even Section 22 (3) (b) of the Act did not prohibit the petitioner from issuing a cash memo without the names of the purchaser is a question of appreciation which can easily be dealt with by the authority.
Consequently for the aforesaid reasons, this Court is not inclined to issue a writ of prohibition. It would be open to the petitioner to file a reply to the notices issued by the authority under Section 54 of the Act and satisfy the authority that no case of penalty is made out in the light of the provisions of the Act.
For the reasons stated aforesaid, the writ petition fails and is dismissed. In the circumstances of the case there shall be no order as to costs.
Order Date :- 22.5.2014
MT**
(Bachchoo Lal,J.) (Tarun Agarwala,J.)
