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2019 DIGILAW 575 (MP)

Mannulal Gyanichand, Shivpuri v. State of M. P.

2019-08-08

SANJAY YADAV, VIVEK AGARWAL

body2019
ORDER : SANJAY YADAV, J. 1. This petition preferred under Article 226/227 of the Constitution of India is directed against the order dated 19-8-2004 and 24-1-2006 passed by the Assistant Commissioner, Commercial Tax and Additional Commissioner, Commercial Tax, Gwalior; whereby, the petitioner has been subjected to reassessment under section 28(1) read with section 29 of the M. P. Commercial Tax Act, 1994 (for brevity “Act”). 2. Petitioner is a proprietorship concern and is in the business of Vanaspati Ghee and Coconut (Nariyal) within the State of Madhya Pradesh. It is a registered dealer under the provisions of the Act. The original assessment of financial year 1997-98, 1998-99, 2000-01 was completed as per provisions under section 27 of the Act and also under Entry Tax Act, 1976 (for short “1976 Act”) on 31-7-2000, 31-8-2001 and 29-12-2001 respectively. 3. That Assistant Commissioner, Commercial Tax, Gwalior (M. P.) in purported exercise of powers under section 28 of the Act issued notices to the petitioner as to escape assessment and sale and purchase of goods of the financial year 1997-98, 1998-99 and 2000-01 respectively qua dealers M/s Deepakraj Traders, DSP Nagar Madurai Tamilnadu, M/s Shri Mahalaxmi Coconut Traders Dindigul, Tamilnadu and M/s Abhinath Coconut Trading Company, Madurai who have allegedly sold coconut were Rs.1,93,114/-, 2,88,842/-, 2,29,488/-, 7,19,545/- and 78,839/-. The petitioner on receiving the notice filed the reply; whereby, he denied any transaction, as alleged. An affidavit was also filed by the assessee to that effect on 15-8-2004. By order passed on 19-8-2004, the Assistant Commissioner held the assessee liable for additional tax and imposed the penalty thereon for the years under consideration. On revision under section 62 of the Act being preferred by the assessee against the impugned order, the Revisional Authority by impugned order dated 24-1-2006 dismissed it. Aggrieved, the petitioner has preferred this petition. 4. Solitary issue raised on behalf of the petitioner is that the Assistant Commissioner (Assessing Officer) passed the order without affording an opportunity of hearing and without disclosing the material collected while forming an opinion for reopening the matter. It is urged that by cryptic order, the Assistant Commissioner, Commercial Tax, held the petitioner liable for the tax. 4. Solitary issue raised on behalf of the petitioner is that the Assistant Commissioner (Assessing Officer) passed the order without affording an opportunity of hearing and without disclosing the material collected while forming an opinion for reopening the matter. It is urged that by cryptic order, the Assistant Commissioner, Commercial Tax, held the petitioner liable for the tax. It is further contended that the fact that there were certain material available with the authority concerned could be borne out only when the Revisional Authority dwelt upon the same in its order passed on 21-4-2006 that a team of sales tax officers was sent to Tamilnadu from where they collected certain information from the traders i.e. M/s Deepakraj Traders, DSP Nagar Madurai Tamilnadu, M/s Shri Mahalaxmi Coconut Traders Dindigul, Tamilnadu and M/s Abhinath Coconut Trading Company, Madurai. It is urged that the Assistant Commissioner, Commercial Tax did not afford any opportunity to the assessee and on the basis of the information collected behind its back passed the order of reassessment. Whereas no such transaction as was collected by the team at Tamilnadu was entered into by the petitioner. On these contentions, the petitioner seeks quashment of the reassessment and its affirmation by the Revisional Authority. 5. Respondents, on their turn, have supported the orders on the contention that the there was material evidence on record to justify the order of reassessment and its affirmation in the revision; however, when called upon to establish as to whether an opportunity of hearing to the extent of cross-examination of the traders from whom the department has collected the information before issuing the notice under section 28(1) of the Act was afforded to the petitioner, learned Government Advocate, however, is unable to commend at any cogent material which establishes that opportunity of hearing was given to the petitioner. 6. The order passed by the Assistant Commissioner, as is evident therefrom, does not analyze any fact. It only states ^^eq[;ky; ls izkIr tkudkjh ds vuqlkj^^ . The information said to have been received from the headquarters has not been shared with the petitioner as the order is silent to that effect. 6. The order passed by the Assistant Commissioner, as is evident therefrom, does not analyze any fact. It only states ^^eq[;ky; ls izkIr tkudkjh ds vuqlkj^^ . The information said to have been received from the headquarters has not been shared with the petitioner as the order is silent to that effect. It is only when the petitioner prefers a revision, the Revisional Authority dwells upon the material collected by the team of commercial tax officers which was sent to the Madurai and the burden is shifted on the assessee that it did not discharge the same by producing certificate from the respective traders. 7. Sub-section (1) of section 28 of the Act contemplates that where an assessment has been made under this Act or the Act repealed by this Act and if for any reason any sale or purchase of goods chargeable to tax under this Act or the Act repealed by this Act during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom or a set off has been wrongly allowed, the Commissioner may, at any time within five calendar years from the date of order of assessment after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess within a period of two calendar years from the commencement of such proceedings the tax payable by such dealer and the Commissioner may, where the omission leading to such reassessment is attributable to the dealer, direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount. Thus, imperative it is for the authority concerned to afford, the assessee, a reasonable opportunity of hearing and after making enquiry, as it considers necessary, pass the order. In the case at hand no material is commended at by the respondent/State as to any opportunity of hearing was afforded to the petitioner and that material collected by them before issuing notice or even along with the notice was ever disclosed to the petitioner. 8. In the case at hand no material is commended at by the respondent/State as to any opportunity of hearing was afforded to the petitioner and that material collected by them before issuing notice or even along with the notice was ever disclosed to the petitioner. 8. In this context, reference can be had of the decision in State of Kerala vs. K. T. Shaduli Grocery Dealer etc., AIR 1977 SC 1627 ; wherein, it is held that tax authorities entrusted with the power to make assessment of tax discharge quasi-judicial function and they are bound to observe principles of natural justice in reaching their conclusions. It is observed that one of the rules which constitutes a part of the principles of natural justice is the rule of audi alterem partem which requires that no man should be condemned unheard. It is indeed a requirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties. It was held : “5. ….....The usual mode recognised by law for proving fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness or completeness of the return would, therefore, necessarily carry with it the right to examine witnesses and that would include equally the right to Cross-examine witnesses examined by the Sales Tax Officer. Here, in the present case, the return filed by the assessee appeared to the Sales Tax Officer to be incorrect or incomplete because certain sales appearing in the books of Hazi Usmankutty and other wholesale dealers were not shown in the book’s of account of the assessee. The Sales Tax Officer relied on the evidence furnished by the entries in the books of account of Hazi Usmankutty and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete. The Sales Tax Officer relied on the evidence furnished by the entries in the books of account of Hazi Usmankutty and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete. Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other wholesale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross-examining Hazi Usmankutty and other wholesale dealers with reference to their accounts. Since the evidentiary material procured from or produced by Hazi Usmankutty and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incorrect and incomplete, the assessee was entitled to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross-examination. It can hardly be disputed that cross-examination is one of the most efficacious methods of establishing truth and exposing falsehood. Here, it was not disputed on behalf of the Revenue that the assessee in both cases applied to the Sales Tax Officer for summoning Hazi Usmankutty and other wholesale dealers for cross-examination, but his application was turned down by the Sales Tax Officer. This act of the Sales Tax Officer in refusing to summon Hazi Usmankutty and other wholesale dealers for cross-examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee.” 9. When the case at hand is adjudged on the anvil of law laid down in K. T. Shaduli Grocery Dealer (supra), we are of the considered opinion that the Authorities concerned failed to discharge the duties cast on them under the provisions of the Act as much as without affording reasonable opportunity of hearing to the petitioner, the order of reassessment has been passed which cannot be sustained in the eyes of law. 10. Consequently, impugned orders are quashed. The petitioner shall be entitled to all consequential benefits. No costs. Petition allowed.