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2014 DIGILAW 48 (JK)

V. S. Industries v. Commissioner, CT, J&K, Jammu

2014-02-12

K.A.Qureshi

body2014
1. This appeal is directed against the order dated 27th April, 2012 passed by Ld. Commissioner, Commercial Taxes (Appellate Authority), Jammu in appeal titled M/s V.S. Industries v. Commissioner. Commercial Taxes, Jammu and another, whereby the Ld. Commissioner has rejected the appeal which was remanded back by this Tribunal vide its order dated 19-12-2011 for deciding the issue of limitation in earlier appeal filed by the counsel for appellant. 2. The brief resume of the case is that on 10-04-2008 a vehicle bearing registration No. HR-55-C-4028 of Transport Agency M/s Om Logistic Ltd. was put to physical check and as per the documents appellant has consigned by way of invoices, 2 to 4 dated 09-04-2008, Menthol Flakes to M/s Symrise Pvt. Ltd. Chennai and on physical verification of the goods, it has been alleged that three drums were filled with some kind of waste product/ wax (Menthol flavoured) instead of menthol flakes. The Dy. Commissioner, Lakhanpur Checkpost has treated the documents accompanying the goods as false in respect of nature of goods and after issued statutory notice and considered the objections filed and passed the penalty order under section 67(5) of the J&K VAT Act 2005 (hereinafter called Act) on 31-05-2008. 3. Aggrieved by the order passed by the Ld. Dy. Commissioner, appellant filed appeal before Ld. Commissioner, Commercial Taxes J&K (Appellate Authority) under section 72 of the Act and Ld. Commissioner vide his order dated 15-04-2009 has upheld the order passed by the Ld. Dy. Commissioner and dismissed the appeal. 4. The appellant aggrieved of the order dated 15-04-2009 filed 2nd appeal before this Tribunal u/s 73 of the Act. This Tribunal vide order dated 09-12-2011 has set aside the order passed by the Ld. Commissioner with a direction to decide the issue of limitation which has been projected by the counsel for appellant in his memorandum of appeal, which remains undecided before the Ld. Appellate Authority/ Commissioner. 5. After remanding the case back to Ld. Commissioner by this tribunal, the Commissioner has returned finding without decided issue of limitation and rejected the appeal of appellant vide his order dated 27-04-2012. 6. Appellate Authority/ Commissioner. 5. After remanding the case back to Ld. Commissioner by this tribunal, the Commissioner has returned finding without decided issue of limitation and rejected the appeal of appellant vide his order dated 27-04-2012. 6. Aggrieved by the order dated 27-04-2012 passed by the Commissioner (Appellate Authority) appellant filed this appeal and raised three issues which reads as under:- a. Whether the order passed by the Assessing Authority under section 67(5) of the J&K Value Added Tax Act, 2005 beyond 30 days from the statutory period specified in the Show Cause Notice suffers from the vice of Rule 71(d) of the J&K Value Added Tax Rules, 2005? b. Whether the Learned Commissioner, Commercial Taxes (Appeals), J&K, Jammu, was Justified in placing reliance on Rule 91 of the J&K Value Added Tax Rules, 2005 deciding the issue of limitation? c. Whether the Ld. Dy. Commissioner, Commercial Taxes, Checkpost, Lakhanpur or Commissioner, Commercial Taxes was justified in not accepting the Analyzing report of the State Forensic Science Laboratory and the detailed report on menthol issued by the FICCI while trying to justify the seizure and imposition of penalty? 7. Before adjudicating upon these issues, it is necessary to reproduce the concluding paras of the Judgment/ order passed by this Tribunal dated 09-12-2011 and order passed by the Commissioner dated 27-04-2012. 8. Order passed by Tribunal dated 09-12-2011 ".................The Assessing Authority issued notice, in Form VAT-66, to the dealer, on the 15th of April, 2008, directing the dealer to appear before him on, or before, 30-04-2008, showing cause as to why an order levying the penalty be not made. In response to this notice Sh. R.L. Gupta, Advocate, appeared on behalf of the dealer and filed written arguments. He also requested the Ld. Dy. Commissioner, Commercial Taxes, Lakhanpur to conclude the proceedings. The said authority held him liable to pay a penalty of Rs. 87, 450/-.The order levying penalty was made on 31-5-2008 i.e. after the period of 30 days as prescribed by Rule 71(d) cited above. The terms of Rule 71(d) are mandatory. The said Rule requires the order to be passed within the period of 30 days only from the date specified in the notice, subject, however, to the rider that this period could be extended by 30 days by an order passed by Ld. Commissioner for cogent reasons. The terms of Rule 71(d) are mandatory. The said Rule requires the order to be passed within the period of 30 days only from the date specified in the notice, subject, however, to the rider that this period could be extended by 30 days by an order passed by Ld. Commissioner for cogent reasons. There is nothing on record to show that this period of 30 days was stretched to any further length by the orders of the Ld. Commissioner. Therefore the Ld. Dy. Commissioner had to follow the Rule position in its rigor and vigor. In the authority not following this Rule a valuable right has accrued to the dealer since the order has been passed after the prescribed period. No finding has been returned on the issue of limitation by the Ld. Commissioner though it has been there in form and substance in the memorandum of appeal. The issue of limitation could be decided by the Ld. Appellate Authority suo motto also even if the dealer had not raised such a plea in the memorandum of appeal. Rule 79 (c) of the Jammu and Kashmir Value Added Tax Rules, 2005 makes it clear that the Appellate Authority shall in its order mention all the grounds taken in the memorandum of appeal and any other additional grounds allowed during the course of the appellate proceedings. What requires to be reiterated here is that the issue of limitation has not been decided by the Ld. Commissioner. The order of the Appellate Authority cannot, therefore stand and sustain and is accordingly set aside. The case is remanded to the Appellate Authority who will consider the issue of limitation. Records, summoned if any, be returned forthwith. File shall be consigned to records after its due completion". 9. Order passed by the Commissioner on 27-04-2012 ".. ........ I have gone through the pleadings put across by the appellant and considered the arguments advanced by the Ld. Counsel. Issue No. (1) as regards whether the consignment subjected to penalty was menthol flakes or not, has already been conclusively dealt with and set at rest by the Dy. Commissioner as well as by the Appellate Authority vide orders dated 31-05-2008 and 15-04-2009 respectively, therefore, the said issue needs no Interference. However, issue No. (2) on which the appeal has been remanded to this office by the Ld. Tribunal and argued by the Ld. Commissioner as well as by the Appellate Authority vide orders dated 31-05-2008 and 15-04-2009 respectively, therefore, the said issue needs no Interference. However, issue No. (2) on which the appeal has been remanded to this office by the Ld. Tribunal and argued by the Ld. Counsel for the appellant that the order impugned passed by the Dy. Commissioner is contrary to the spirit of Rule 71(d) of the J&K Vat Rules, 2005 has been examined. Rule 71(d) of the J&K VAT Rules reads as under:_ 71 Detention and seizure of qoods:- (a) XXX (b) XXX (c) XXX (d) On the date specified in the notice "the officer" shall consider the objections raised and the evidence adduced, if any. Thereafter he may cause such other enquiries to be mae as he considers necessary, and pass an order in writing releasing the goods or levying the penalty within 30 days from the date specified in the notice of hearing provided that the Commissioner may for cogent reasons allow him to pass the order after the said period of 30 days. 10. The Ld. Tribunal in its order dated 09-02-2011 has held the aforesaid Rule as mandatory. As to how and in what manner the said Rule is mandatory has not be disclosed. The Hon'ble Supreme Court has already held that:- "the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other" 11. As Rule 71 (d) does not specify the consequences which would entail in the event of its non compliance, therefore, the said rule cannot be said to be mandatory and in fact the same is directory in nature. 12. Further, Rule 91 of the J&K VAT Rules, 2005 provides that the time limit for issuing of order of assessment, appeal, revision are directory and its contravention does not render any proceedings under the Act invalid which are otherwise valid. The Rule 91 of J&k VAT Rules 2005 is reproduced herein below: 91. 12. Further, Rule 91 of the J&K VAT Rules, 2005 provides that the time limit for issuing of order of assessment, appeal, revision are directory and its contravention does not render any proceedings under the Act invalid which are otherwise valid. The Rule 91 of J&k VAT Rules 2005 is reproduced herein below: 91. Proceedings under the Act not to become invalid:-The rules prescribing the registers to be maintained by the authorities or time limit for submission of reports by the Assessing Authority to the higher authorities or prescribing time limit for issuing the order of assessment, appeal and revision are directory and the contravention thereof shall not render any proceedings under the Act invalid, which are otherwise valid. 13. Order passed by the Deputy Commissioner, Commercial Taxes, Checkpost, Lakhanpur does not ipso-facto becomes invalid merely because it has been passed beyond the limitation notwithstanding the fact that any order which is otherwise valid is saved by Rule 91 of the J&K VAT Rules, 2005. 14. It appears that Rule 91 was not brought to the notice of the Ld. Tribunal during the course of proceedings in the aforesaid appeal, resulting in passing of the order dated 09-12-2011. 15. Applying the ratio of judgment of Apex Court and for the reasons an the law stated herein above, the issue of limitation has been considered, as remanded by the Ld. Tribunal. There is no merit in the submission of the appellant that the order impugned suffers from the vice of Rule 71(d) of the J&K VAT Rules, 2005. Therefore, the plea of limitation is not sustainable and does not effect the merits of the case, hence rejected. The orders issued for imposition of penalty are held to be legally valid. Records, summoned be returned forthwith". 16. The Ld. Commissioner was directed by this Tribunal to decide/ consider the issue of limitation as same has not been decided by the order impugned (earlier), while doing so the Ld. (Commissioner did not appreciate the spirit of Rule 71(d) of the Act but relied on the ratio of Apex Court judgment which is having no citation or case law. Also relied on Rule 91 of the Act. I feel it proper to reproduce the Rule 71(d) and Rule 91 71-(d):-On the date specified in the notice "the officer" shall consider the objections raised and the evidence adduced, if any. Also relied on Rule 91 of the Act. I feel it proper to reproduce the Rule 71(d) and Rule 91 71-(d):-On the date specified in the notice "the officer" shall consider the objections raised and the evidence adduced, if any. Thereafter he may cause such other enquiries to be made as he considers necessary, and pass an order in writing releasing the goods or levying the penalty within 30 days from the date specified in the notice of hearing provided that the Commissioner may for cogent reasons allow him to pass the order after the said period of 30 days. 17. Rule 91. Proceedings under the Act not to become invalid:-The rules prescribing the registers to be maintained by the authorities or time limit for submission of reports by the Assessing Authority to the higher authorities or prescribing time limit for issuing the order of assessment, appeal and revision are directory and the contravention thereof shall not render any proceedings under the Act invalid, which are otherwise valid. 18. It must be remembered that the proceedings under section 67(5) i.e. levy of penalty are harsh and penal in nature and thus the benefit of all the safeguards provided to the dealer shall be given. The Tribunal and all the Authorities below are creatures of statute, and when statute requires certain things to be done in certain way the thing must be done in that way, or not at all, other mode of performance are impliedly and necessarily forbidden. Reliance can be had from Gindal stainless Ltd., v. State of Orissa (2012) Page 54 VST 1 page 1 Orissa High Court. 19. The Rule 71(d) is complete code and lays down the procedure for penalty envisaged under section 67(10). The Commissioner has misdirected himself while applying Rule 91 of the Act for deciding and adjudicating the period of limitation for passing order of penalty beyond 30 days as envisaged in Rule 71(d). It is clear in Rule 71(d) of the Act, the officer concerned has to pass an order in writing releasing the goods or leving the penalty within 30 days from the date specified in the notice of hearing. The Ld. Dy. It is clear in Rule 71(d) of the Act, the officer concerned has to pass an order in writing releasing the goods or leving the penalty within 30 days from the date specified in the notice of hearing. The Ld. Dy. Commissioner has passed the order levying penalty after 30 days, for which Rule 71(d) provides that if for cogent reasons the order cannot passed within 30 days, he has to reply for Commissioner to passed order beyond 30 days. There by Rule becomes mandatory in nature and has to comply in its letter and spirit. The Ld. Commissioner is not justified in applying rule 91 of the Act. This shall apply to prescribing time for issuing the order of assessment, appeal, revision, but does not apply to the order of penalty. 20. Viewed thus, for the reasons and the observations made hereinabove I would hold that the order passed by the Ld. Commissioner and Dy. Commissioner are bad in the eyes of law and does not stand and sustain and are thus required to be setaside. 21. Accordingly the appeal of the appellant is accepted and the order passed by the Ld. Dy. Commissioner and confirmed by the Ld. Commissioner are set aside. 22. Let the copy of this order be placed and convey. The record call be sent back forthwith and appeal file be consigned to records.