Vivaa Tradecom Pvt. Ltd. Vs State of Gujarat (Gujarat High Court)
The Gujarat High Court quashed the order and the demand notice passed by the respondent authority because of the procedural lapses and remitting the matter back to the respondent authority for fresh hearing.
The first writ applicant, M/s Viva Tradecom Pvt. Ltd is a company inter alia engaged in the business of manufacturing and sale of readymade garments and fabrics. The writ applicant No.1 is duly registered under the Value Added Tax Act. The second writ applicant carried out the assessment proceedings under Sub-section (2) of Section 34 of the VAT Act for the period 2015-16.
The respondent authority assessed total dues of Rs.56,12,988/-, which includes the value-added tax (VAT) to the tune of Rs.17,43,164/-, interest of Rs.12,55,078/- thereon and the penalty of Rs.26,14,746/- imposed at the rate of 150% under Section 34(12) of the VAT Act vide the impugned assessment order passed in form No.304 under Section 34 of the VAT Act.
The writ applicants argued that the respondent authority failed to provide the copies of assessment orders including the order of cancellation of registration of vendors from whom the writ applicants purchased the goods. In such circumstances, his clients had no opportunity to prove the genuineness of such a transaction.
It was further argued that the disallowance of Input Tax Credit without providing a copy of the order of cancellation of the registration certificate of the vendor is in gross violation of the principles of natural justice.
The respondents have vehemently opposed this writ application and has raised a preliminary objection with regard to the maintainability of the present writ application on the ground that the writ applicants have an alternative efficacious remedy of preferring an appeal against the impugned order under Section 73 of the Gujarat Value Added Tax Act, 2003.
The division bench headed by Chief Justice Vikram Nath while going root to the matter noted many procedural lapses on the part of the respondent authority.
“There is no escape from the fact that the hearing for the purpose of imposing penalty under the Act, 2003 pursuant to the notice issued in that regard in Form No.309 was fixed on 24th March 2020. The notice in Form No.309 is dated 17th March 2020. However, it appears that when the representative of the writ applicants appeared before the respondent No.2 on 17th March 2020, a copy of the Form No.309 was served upon him and on the very next date i.e. 18th March 2020, the hearing was undertaken and the order also came to be passed on the very same date including the order of penalty,” the bench observed.
Therefore, the bench quashed the order and remitted the matter to the respondent authority for its fresh consideration, on merits. The claim of Input Tax Credit shall be considered fresh after giving due opportunity of hearing to the writ applicants.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs:
“(a) The Hon’ble Court be pleased to quash and set aside the impugned Order dated 18.03.2020 and the demand notice dated 18.03.2020 issued by the Respondent No. 2 and annexed hereto as Annexurc A (Colly.) to the extent the impugned order disallow the claim of input tax credit;
(b) and Pending admission and final bearing of this Petition this Hon’ble Court be pleased to by way of ad interim and/or interim relief stay the operation, implementation and recovery under the impugned order dated 18.03.2020 and demand notice dated 18.03.2020 annexed as Annexure A (Colly) hereto;
(c) and Ex parte ad-interim relief in term of paragraph 9(b) be granted; and
(d) For Costs; and
(e) That this Honorable Court be pleased to grant such other and further reliefs as are deemed just and proper in the facts and circumstances of this case.”
2. The facts in brief giving rise to this litigation are stated thus:
2.1 The writ applicant No.1 is a company inter alia engaged in the business of manufacturing and sale of ready made garments and fabrics. The writ applicant No.1 is duly registered under the Value Added Tax Act.
2.2 The writ applicant No.2 carried out the assessment proceedings under Sub-section (2) of Section 34 of the VAT Act for the period 2015-16. The respondent No.2 assessed total dues of Rs.56,12,988/-, which includes the value added tax to the tune of Rs.17,43,164/-, interest of Rs.12,55,078/- thereon and the penalty of Rs.26,14,746/- imposed at the rate of 150% under Section 34(12) of the VAT Act vide the impugned assessment order dated 18th March 2020 passed in form No.304 under Section 34 of the VAT Act.
3. In such circumstances referred to above, the writ applicants are here before this Court with the present writ application.
