Gujarat High Court
Oceanic Motors Private Limited vs State Of Gujarat on 27 January, 2021
Bench: J.B.Pardiwala, Ilesh J. Vora
C/SCA/12311/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12311 of 2020
With
CIVIL APPLICATION (FOR FIXING DATE OF HEARING) NO. 2 of 2020
In R/SPECIAL CIVIL APPLICATION NO. 12311 of 2020
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OCEANIC MOTORS PRIVATE LIMITED
Versus
STATE OF GUJARAT
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Appearance:
YUVRAJ G THAKORE(7785) for the Petitioner(s) No. 1
NOTICE SERVED(4) for the Respondent(s) No. 1,2
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CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 27/01/2021
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. By this writapplication under Article226 of the Constitution of
India, the writapplicant - a Company incorporated under the provisions
of Companies Act, 1956 through one of its Director has prayed for the
following reliefs:
11(A) be pleased to issue an appropriate writ in the nature of
certiorari or any other appropriate writ, order or direction, quashing
and setting aside the order dated 08.09.2019 passed by the respondent
no.2 authority and annexed at AnnexureD to the petition;
(B) be pleased to issue a writ of certiorari/ mandamus or any other
appropriate writ, order or directions quashing and setting aside the
consequential action of the respondent authority of attaching the bank
account of the petitioner under Section44 of the GVAT Act, 2003
annexed at AnnexureF;
(C) pending admission, hearing and final disposal of this petition;
C/SCA/12311/2020 ORDER
(i) be pleased to stay the execution and implementation of order dated
08.09.2019 passed by the Respondent No.2 which is annexed at
AnnexureD.
(ii) be pleased to stay the attachment order passed by the Respondent
No.2 Authority, whereby the bank of the petitioner company is
attached which is annexed at AnnexureF and permit the petitioner to
operate the Ban Account as the petitioner is a working enterprise.
(D) be pleased to grant such other and further reliefs and/or orders in
the interest of justice in favour of the petitioner as deemed just and
proper;
2. The facts giving rise to this writapplication may be summarized
as under:
2.1 The writapplicant seeks to challenge the legality and validity of
the order passed by the respondent no.2 herein dated 08.07.2019 under
the purported exercise of powers under Section34(8A) of the Gujarat
Value Added Tax, 2003 [for short 'The GVAT']. The writapplicant also
seeks to challenge the legality and validity of the order passed by the
respondent attaching the bank account of the writapplicant in exercise
of power under Section44 of the GVAT.
2.2 It appears from the materials on record that the writapplicant was
served with a notice in the Form No.302 dated 21.01.2015 for the
assessment year 201011 under Section34(2) of the GVAT. Pursuant to
such notice, the writapplicant appeared before the Assessing Officer and
an order was passed raising the demand of Rs.3,31,882/. It is not in
dispute that the writapplicant paid the amount of Rs.3,31,882/ as
assessed by the Assessing Officer. With the payment of the said amount,
the proceedings for the assessment year 201011 got completed and
nothing remain pending in that regard.
C/SCA/12311/2020 ORDER
2.3 It appears that thereafter, a notice came to be served dated
10.08.2019 along with the copy of the assessment order referred to
above under Section34(8A) of the GVAT Act. The notice under Section
34(8A) of the GVAT came to be issued by the very same Assessing
Officer, who had earlier passed the original order dated 21.02.2015.
2.4 Ultimately, the impugned order dated 08.07.2019 came to be
passed by the Assessing Officer fixing the liability of Rs.67,35,964/. It
appears that pursuant to the order passed by the respondent herein
under Section34(8A) of the GVAT Act, 2003 an attachment order dated
30.06.2020 came to be passed with respect to the bank account of the
writapplicant. This attachment order came to be passed in exercise of
power under Section44 of the GVAT Act, 2003.
3. Being dissatisfied with the aforesaid action, the writapplicant is
here before this Court with the present writapplication.
4. Mr. Yuvraj Thakore, the learned counsel appearing for the writ
applicant vehemently submitted that the impugned order dated
08.07.2019 passed by the respondent no.2 under Section34(8A) of the
GVAT Act is exfacie, illegal and without jurisdiction. He would submit
that the period of assessment under Section34(2) of the GVAT for the
year under consideration 201011 was completed in the year 2015 i.e.
on 31st March, 2015 and the period of audit assessment [reassessment]
under Section35 of the GVAT was completed on 31st March 2016. He
would argue that when the statutory period as prescribed by law came
to an end wayback in 2016, it was not open for the respondent
authority to overlook the period of limitation under the garb of under
Section34(8A) of the GVAT Act.
C/SCA/12311/2020 ORDER
5. He would submit that the condition precedent for invoking
Section34(8A) of the GVAT Act, 2003 is the pendency of any
proceedings under the Act. It is only in the course of any proceedings
under the GVAT Act if the authority is satisfied that the tax has been
evaded or the tax liability has not been disclosed correctly then, in such
circumstances, the authority can initiate the assessment in respect of
such transaction or claim after giving a reasonable opportunity of being
heard. It is argued that when everything came to an end wayback in
2015 itself and when there were no proceedings pending of any nature,
invoking of the Section34(8A) of the GVAT Act could be said to be
without jurisdiction.
6. Mr. Thakore would submit that if the impugned order dated
08.07.2019 is declared as illegal by this Court then the order of
attachment of the bank account under Section44 of the GVAT Act would
also have to be declared as illegal and without jurisdiction. In such
circumstances referred to above, Mr. Thakore prays that there being
merit in this writapplication, the same be allowed and the impugned
order of assessment dated 08.07.2019 and the attachment order dated
30.06.2020 be quashed and set aside.
7. On the otherhand, this writapplication has been vehemently
opposed by Mr. Chintan Dave, the learned AGP appearing for the
respondents. Mr. Dave would submit that the impugned order dated
08.07.2019 passed by the respondent no.2 under Section34(8A) of the
GVAT Act is an appealable order under Section73 of the Act. As there is
a statutory remedy available to the writapplicant of filing an appeal, this
writapplication may not be entertained. Mr. Dave would also submit
that the legality and validity of the attachment order passed under
Section44 of the Act can also be examined by the appellate authority, if
C/SCA/12311/2020 ORDER
an appeal is preferred by the writapplicant. In such circumstances
referred to above, Mr. Dave prays that there being no merit in this writ
application, the same be rejected.
8. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the only question that falls
for our consideration is - whether the respondent no.2 could have
invoked Section34(8A) of the GVAT Act, 2003?
9. Section34(8A) of the GVAT Act, 2003 reads thus:
Section34(8A)(a) During the course of any proceedings under this
Act, if the prescribed authority is satisfied that the tax has been evaded
or sought to be evaded or the tax liability has not been disclosed
correctly or excess tax credit has been claimed by any dealer in respect
of any period or periods by not recording or recording in an incorrect
manner, any transaction of sale or purchase, or that any claim has
been incorrectly made, then in such a case notwithstanding any notice
for assessment has been issued under other provisions of this section or
any other section of this Act, the prescribed authority may, after giving
such dealer a reasonable opportunity of being heard, initiate
assessment of the dealer in respect of such transaction or claim:
Provided that where such proceedings are under section 73 or section
75, the prescribed authority shall transfer the proceedings relating to
such transaction or claim directing the concerned assessing authority
to assess the dealer in respect of such transaction or claim: Provided
further that the prescribed authority shall, notwithstanding anything
contained in section 17, be deemed to have the requisite jurisdiction
and power to assess such dealer in respect of such transaction of sale or
purchase or claim, covered by clause
(a) and such assessment proceedings shall, for all purposes of this Act,
be deemed to have been transferred to such authority.
(b) The assessment proceedings under this subsection shall be without
prejudice to the assessment proceedings in respect of the said period or
periods under any other provisions of this Act by any authority who
otherwise has the jurisdiction to assess such dealer in respect of other
transactions of sale or purchase or any other claim.
(c) The assessment under this subsection shall be made separately in
respect of the transaction or claim relating to the said period or
periods to the best of the judgment of the prescribed authority where
necessary and irrespective of any assessment made under this sub
C/SCA/12311/2020 ORDER
section, the dealer may be assessed separately under the other
provisions of this section in respect of the said period or periods:
Provided that, once the dealer is assessed under this subsection, no tax
from such transaction or claim and penalty and interest, if any, shall
be levied or demanded from such dealer, at the time of assessment to
tax under the other provisions of this section in respect of the said
period or periods relating to such transaction or claim.
Explanation. For the purpose of this subsection, "prescribed
authority", "the said authority", "such authority" and "any authority"
shall mean, the Commissioner or, as the case may be, the authorities
appointed under section 16 and other officers or persons to whom the
Commissioner has delegated his power in this behalf.]
10. Section44 of the Act, which provides for special mode of
recovery. Section44 reads thus:
44. Special mode of recovery. (1) Notwithstanding anything
contained in any law or contract to the contrary, the Commissioner
may, at any time or from time to time, by notice in writing, a copy of
which shall be forwarded to the dealer at his last known address,
require.
(a) any person from whom any amount of monies is due, or may
become due, to dealer on whom notice has been served under sub
section (1), or
(b) any person who holds or may subsequently hold monies for or on
account of such dealer, to pay to the Commissioner, either forthwith
upon the monies becoming due or being held or within the time
specified in the notice (but not before the monies becomes due or is
held as aforesaid) so much of the monies as is sufficient to pay the
amount due by the dealer in respect of the arrears of tax, penalty or
interest under this Act, or the whole of the money when it is equal to
or less than that amount.
Explanation. For the purposes of this subsection, the amount of
monies due to a dealer from, or monies held for or on account of a
dealer by any person, shall be calculated by the Commissioner after
deducting therefore such claims, if any, lawfully subsisting, as may
have fallen due for payment by such dealer to such person. (2) The
Commissioner may amend or revoke any such notice or extend the
time for making any payment in pursuance of the notice. (3) Any
person making any payment in compliance with a notice under this
section shall be deemed to have made the payment under the authority
of the dealer, and the receipt thereof by the Commissioner shall
constitute a good and sufficient discharge of the liability of such person
C/SCA/12311/2020 ORDER
to the extent of the amount specified in the receipt. (4) Any person
discharging any liability to the dealer after receipt of the notice
referred to in this section, shall be personally liable to the
Commissioner to the extent of the liability discharged or to the extent
of the liability of the dealer for tax, penalty and interest, whichever is
less. (5) Where a person to whom a notice under this section is sent
objects to it by a statement in writing that the sum demanded or any
part thereof is not due or payable to the dealer or that he does not
hold any monies for or an account of the dealer, the Commissioner
shall hold an inquiry and after giving to such person or dealer a
reasonable opportunity of being heard, make such order as he thinks
fit. (6) Any amount of monies which the aforesaid person is required
to pay to the Commissioner, or for which he is personally liable to the
Commissioner under this section shall, if it remains unpaid, be
recoverable as an arrears of land revenue. (7) The commissioner may
apply to the court in whose custody there in monies belonging to the
dealer for payment of the amount of such monies towards the
outstanding amount of tax, interest and penalty payable by the dealer.
11. Ordinarily, we would not have entertained this writapplication on
the ground that the impugned order dated 08.07.2019 passed under
Section34(8A) of the GVAT Act, 2003 is an appealable order. However,
in view of certain pleadings in the writapplication, we thought fit to
issue notice and call upon the respondents to justify its action of
invoking Section34(8A) of the Act.
12. Mr. Dave, the learned AGP after taking appropriate instructions in
this regard from the authority concerned submitted that there is no
escape from the fact that at the time when Section34(8A) of the Act
came to be invoked, there were no proceedings of any nature pending
against the writapplicant. Mr. Dave, the learned AGP with his usual
fairness and with a view to assist this Court submitted that Section
34(8A) of the act can be invoked only during the course of proceedings
under the Act. Mr. Dave has been informed by the concerned authority
in writing that as such there were no proceedings of any nature pending
on the date when the notice came to be issued under Section34(8A) of
C/SCA/12311/2020 ORDER
the Act. If such is the factual position then the issue of limitation also
pales into insignificant.
13. Mr. Dave has placed on record a communication received by him
from the Commercial Tax Officer, Ahmedabad. The same reads as
under:
To
The Commercial Tax Officer,
Ghatak6
Ahmedabad.
Subject: In the matter of Oceanic TVS
Sir,
This letter is to bring to your notice that the total sales to the tune of
Rs.1,73,76,400/ for the year 201011 is towards sales of Used Four
Wheelers vehicles. It is submitted that the Assessee had already
submitted the details of the said sales.
Even otherwise the total sale amount is around 1.73 crores and the
total units of used vehicle sold are 68, dividing the total sales amount
by the total unit sold would come to around 2.54 lacs which in any
case cannot be the sales amount of two wheelers.
Hence, the said sales are of four wheelers and not two wheeler vehicles.
Regards,
OCEANIC MOTORS PVT. LTD.
Authorized Signatory/ Director
USED MOTOR VEHICLES SALES
201011
Month Sales Amount No. VAT Amount
April 10 1773000 5 10000
May 10 1768000 5 10000
June 10 2565000 5 10000
July 10 1074000 4 8000
August - 10 783500 2 4000
C/SCA/12311/2020 ORDER
September - 10 1930700 4 8000
October - 10 1115100 6 12000
November - 10 1226500 6 12000
December - 10 1454600 8 16000
January - 11 1444000 8 16000
February - 11 1223000 6 12000
March 11 1019000 9 18000
Total Amount 17376400 68 136000
SALES
0 (Zero) % 17376400
12.50% 146988592
15.00% 926784
Total 165291776
14. The communication is ordered to be taken on record. The plain
reading of the aforesaid communication would indicate that the matter
was closed for the assessment year 201011.
15. We are of the view that as the condition precedent for invoking
Section34(8A) of the Act is not fulfilled in the present case, not only the
impugned order dated 08.07.2019 of assessment is rendered illegal, but
even the subsequent action in the form of attachment order under
Section44 of the Act would be rendered without jurisdiction.
16. In taking aforesaid view, we are supported by the following
decisions:
1. Dhanani Impex Private Limited Vs. State of Gujarat & Anr.
Special Civil Application No.9519 of 2016
Order Dt.21.07.2016
2. State of Gujarat Vs. Dhanani Impex Private Limited
Diary No.27423 of 2017; Order dt.03.10.2017
C/SCA/12311/2020 ORDER
3. Royal Enterprise Vs. State of Gujarat
Special Civil Application No.18146 of 2016; Order dt.14.11.2016
4. State of Gujarat Vs. Royal Enterprise
Diary No.32542 of 2017; Order dt.30.10.2017
5. H. Tribhovandas and Sons Vs. State of Gujarat
Special Civil Application No.3002 of 2018; Order dt.16.04.2018
6. Samay Sales Through Proprietor Rajendra Jethabhai Keshwani Vs.
State of Gujarat
Special Civil Application No.6686 of 2018; Order dt.27.04.2018
7. Samay Sales Through Proprietor Rajendra Jethabhai Keshwani Vs.
State of Gujarat
Special Civil Application No.6686 of 2018; Order dt.16.07.2018
8. Raakratna Metal Industries Ltd. Vs. State of Gujarat
Special Civil Application No.15093 of 2018; Order dt.20.06.2019
17. We may quote the relevant observations made in one of the orders
referred to above i.e. in the case of Dhanani Impex Private Limited Vs.
State of Gujarat & Anr. [Supra]. We quote as under:
9. Section 35 pertains to turn over escaping assessment.
Subsection (1) thereof provides that where after a dealer has been
assessed under sections 32, 33, or 34 for any year or part thereof, the
Commissioner has reason to believe that whole or any part of the
taxable turnover in respect of any period has escaped assessment or
has been under assessed or has been assessed at the lower rate or
wrongly been allowed in deduction or wrongly allowed a credit, the
Commissioner may serve a notice to the dealer and after giving
opportunity to the dealer and making an inquiry, if found necessary,
proceed to the best of his judgment the amount of tax due to the dealer
in respect of such turnover. Subsection (2) of section 35 provides that
no order under subsection (1) shall be made after the expiry of 5 years
from the end of the year in which or part of which the tax is
assessable.
10. It can thus, be seen that detailed provisions are be made in
chapterV of the VAT Act for dealers to file returns and for the
prescribed authorities to assess such returns and thereby compute the
dealers' correct tax liability. The VAT Act also contains detailed
provisions for appeal and revisions against such orders of assessment.
Subsection (8A) of section 34 therefore needs to be seen in background
C/SCA/12311/2020 ORDER
of such statutory provisions, particularly, bearing in mind facts of the
case.
11. Facts of the case are that by the time the respondents issued
notice for revising the tax of the petitioner under subsection (8A) of
section 34, the original assessment was already completed in February
2010. In any case, in terms of subsection (9) of section 34, such
assessment became time barred by 31.03.2011. In terms of subsection
(1) of section 35, the Commissioner, if was of the opinion that the
dealer was assessed at a rate lower than the rate it was assessable,
could have passed an order after giving an opportunity of being heard
to the dealer. However, even such order could be passed as provided
under subsection (2) of section 35 only within five years from the end
of the year in which such tax liability arose.
12. When the petitioner's assessment thus became final and by
efflux of time, even exercise of powers by the Commissioner under
section 35(1) became barred by limitation, subsection (8A) was not
even yet introduced in the statute book. We have serious doubt
whether this provision could be applied to the periods prior to the date
when the provision was enacted. However, at any rate, to apply to
such a situation where the original assessment and any scope by the
Commissioner to revise the tax in terms of subsection (1) of section 35
has long pass, been barred by limitation, would expose the provision to
vulnerability on the ground of virus.
13. There is yet another strong reason why we cannot upheld the
action of the respondent authorities. Clause(a) of subsection (8A)
which empowers the prescribed authority to collect tax when it is found
that tax has been evaded or sought to be evaded or tax liability has not
been disclosed correctly or excess tax has been claimed, the same can be
done during the course of any proceedings if the prescribed authority is
so satisfied. The pendency of proceedings therefore, would be sinequa
non for exercise of such powers. Admitted facts are that no proceedings
for assessment of the petitioner were pending on that day. The return
filed by the petitioner for the relevant year was long past assessed and
closed. We are not inclined to accept the contention of the counsel for
the petitioner that the proceedings referred to in clause (a) of
subsection (8A) must relate to the assessment of that period alone.
Nevertheless, when the legislature has used the expression "during the
course of any proceedings under this Act ..." it must have reference to
proceedings for assessment of liability of dealer for the tax at any stage
that may be pending. Mere internal scrutiny or examination of file
cannot be said to be pendency of proceedings envisaged in clause(a) of
subsection (8A).
C/SCA/12311/2020 ORDER
18. We take notice of the fact that the decision of this High Court in
the case of Danani Imp. Exp. Pvt. Ltd. [Supra] was carried by the
department to the Supreme Court. However, the challenge failed and the
judgment of this Court has been affirmed by the Supreme Court.
19. For the forgoing reasons, this writapplication succeeds and is
hereby allowed. The impugned order dated 08.07.2019 passed by the
respondent no.2 AnnexureD to the writapplication is hereby quashed
and set aside. The order dated 30.06.2020 AnnexureF to this writ
application attaching the bank account under Section44 of the Act is
also hereby quashed and set aside.
20. The writapplication is accordingly disposed of in the above terms.
ORDER IN CIVIL APPLICATION:
As the main is taken up for hearing today itself, the Civil
Application for fixing date of hearing stands disposed of accordingly.
(J. B. PARDIWALA, J)
(ILESH J. VORA,J)
A. B. VAGHELA
