E-filing of tax returns – Court cannot order that rule should be applied retrospectively, though E-filing should be encouraged

Hindustan Zinc Ltd. Vs. State of Rajasthan and Anr. (Jodhpur High Court)- Court is of the opinion that even though in the era of E-filing of the returns under the various laws, such a practice deserves to be encouraged and is acceptable form of filing of returns to the various Tax Department, it is admitted position before this Court that relevant Rules for filing of soft copies of these returns viz. VAT-07, VAT-08 and VAT-9, particularly assessment year 2007-2008 and 2008-2009 were not available on the statue book on the date when they were filed. In the present case, as aforesaid, the relevant amendments in Rule 19 and 19A reproduced above were brought w.e.f. 20.11.2007 and 29.8.2008 respectively. The notification Annex.10 placed on record also permits only a particular class of dealers to file such returns electronically. The notification dated 27.2.2009 was given immediate effect and the date admittedly fell after relevant dates of filing of soft copy in the present case viz. On 16.10.2006, 30.11.2006, 28.2.2007 and 31.5.2007 respectively.

Moreover, since the assessee has effective alternative remedy by way of filing appeal available to it under Section 82 of the Act and no exceptional grounds are made out in the present case, the present writ petition cannot be maintained and same deserves to be dismissed on the ground of availability of alternative remedy by way of appeal available to the petitioner -assessee.  The learned counsel for the petitioner also urged that Rule 19(6) of the Rules permits removal of defects in filing of returns which was so done in the present case. It will be open for the assessee to raise the said ground before the appellate forums.

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

S.B. Civil Writ Petition No. 11426/2009

Hindustan Zinc Ltd.

V/s

State of Rajasthan and anr.

Date of Order- 19^th December 2011

O R D E R

P R E S E N T  – HONORABLE DR. JUSTICE VINEET KOTHARI

1. The petitioner Hindustan Zinc Limited has filed the present writ petition against the assessment order dtd.22.9.2009 for the assessment year 2006- 2007 (1.4.2006 to 31.3.2007) by Assistant Commissioner, Commercial Taxes, Special Circle, Udaipur under Section 9 of the Central Sales Tax Act, 1956 read with Sections 24, 55, 58, 61 and 73 of the VAT Act, 2003 and Rule 19 of the VAT Rules, 2006. The writ petition contains the following prayers:

“It is, therefore, prayed that the present Writ Petition may kindly be allowed and by an appropriate order or direction‑

(i) the impugned Assessment Order dated 22/9/2009 (Annexure 8) passed by the Respondent No.2 may be quashed and set-aside.

(ii) it may be declared that the Respondent No.2 erred in rejecting the Statement of Purchases (VAT-07 & 8) filed in soft copy.

(iii) Any other order or direction which this Hon’ble Court deems just and proper may also be passed.”

2. The learned counsel for the petitioner, Mr. Dinesh Mehta submitted that in view of Rule 19 of the Rajasthan VAT Rules, 2006 as it existed during the relevant period and which is reproduced here under, did not prohibit filing of soft copy in electronic mode of form no. VAT-07, 08 and 09 which were filed by the assessee– Company on 16.10.2006 for the first quarter, 30.11.2006 for the second quarter, 28.2.2007 for the third quarter and 31.5.2007 for the fourth quarter. He submitted that even a hard copy thereof was submitted in pursuance of notice issued by the assessing authority on 27.1.2009. However, rejecting furnishing of soft copy, the Assessing Authority ignored these forms which contained details of purchases and sales of registered dealer till then to exercise the option under Sub-Section (2) of Section 3 or Section 5 of the Act as provided in Rule 19. Rule 19 of the Rajasthan VAT Rules of 2006 as it existed prior to its substitution completely w.e.f. 1.4.2011 vide notification No.F.12(25) FD/Tax/11-145, dated 9.3.2011 and as it existed in the statute book at the relevant point of time reads as under:

“19. Returns― (1) The return referred to in sub‑ section (1) of section 21 of the Act, shall be submitted by a dealer in form VAT-10 for each quarter within thirty days of the end of the quarter, other than the following class of dealer:

(i) who has opted for payment of tax under sub­section (2) of section 3 or section 5 of the Act or under a notification issued under sub-section (3) of Section 8 of the Act: or

(ii) whose annual tax liability [(output tax +

purchase tax+ reverse tax) including liability under central Sales Tax, 1956] was Rupees twenty thousand or less in the immediately preceding year. However, where a dealer files return electronically along with the requisite documents or submits the same in the soft copy to the Department and informs his assessing authority or the officer authorized by the Commissioner, his intention to file monthly returns, he may file monthly returns within twenty days of the end of the month.

Explanation.― Quarter means the period of three months ending on 30^th June, 30th September, 31st December and 31st March.

(1A) Every dealer other than those who:-

(i)  has opted for quarterly assessment under sub-section (2) of section 23 of the Act; or

(ii) has opted for payment of tax under sub­section (2) of section 3 or section 5 or under a notification issued unde sub-section (3) of section 8 of the Act; or

(iii) has filed audit report under sub-section (1) of section 73 of the Act, shall file, within nine months from the end of the relevant financial year, an annual return in form VAT-10A.

(2) The return referred to in sub-section (1) of section 21 of the Act, shall be submitted by a dealer who has opted for payment of tax under sub­section (2) of section 3 or section 5 of the Act or section 5 or under a notification issued under sub­section (3) of section 8 of the Act, in Form VAT-11, for the year within ninety days of the end of the year and shall be accompanied with treasury receipt(s)/ bank challan(s) of authorized bank as a proof of deposit of tax under section 20 of the Act and shall be signed and verified by the dealer himself or his business manager.

(3)  The return required to be filed, under sub-rule (1), by a registered dealer shall accompany.―

(a) treasury receipt(s) / bank challan(s) of authorized bank as a proof of deposit of tax;

(b) statement of purchases in Form VAT –07A; and (c) statement of sales in Form VAT -8A;

and shall be signed and verified by the dealer himself or his business manager. If any of the above is not enclosed with the return, it shall be deemed to be a case of non-filing of return.

(i) has filed audit report under sub-section (1) of section 73 of th Act; or

(ii) has filed annual return in form VAT-10A shall submit, the trading account and in case of manufacturer, trading and manufacturing account and the profit and loss account within nine months of the end of the year.

(4) The dealer shall file the return to his assessing authority or in the Taxpayers Service Office in whose area of operation, his principal place of business is situated, personally or through registered post.

(5) Where a dealer has more than one place of business, he shall include in the return, the turnover of the principal place of business as well as the turnover of all other places of business and shall file such return in accordance with sub-rule (4).

(6) Where a dealer discovers any omission or error in any return other than annual return furnished by him, he may furnish a revised return at any time prior to the due date for filing of the immediately succeeding return or receipt of the notice under sub-section (1) of section 24 of the Act, whichever is earlier. However, where a dealer has not opted for quarterly assessment under sub-section (2) of Section 23, he may furnish such revised return prior to the furnishing of the annual return in formVAT-10A or receipt of the notice under sub-section (1) of Section 24, whichever is earlier

(7) Notwithstanding anything contained in this rule, any dealer or class or dealers as may be specified by the Commissioner, shall file the return referred to in sub-section (1) of section 21 of the Act, electronically in the manner as provided in

Rule 19A of the said rules.”

(Sub-Rule (7) inserted in Rule 19 by Rajasthan VAT (Seventh) Amendment Rules, 2008 notified vide notification No.F. 12(11 4)FD/Tax/07-61 dtd.29.8.2008)

Rule 19A of the Rajasthan VAT Rules, 2006 prior to its substitution by Notification No.F.12(25)FD/Tax/1 1- 145 dated 9.3.2011 w.e.f. 1.4.2011 applicable to the present period involved in this case read as under:

“19A. Electronic filing of return.- (1) Notwithstanding any thing contained in rule 19, the return referred to in sub-section (1) of section 21 of the Act, may be submitted by a dealer electronically in Form VAT-10 through the official web-site of the Department for each quarter within forty five days of the end of the quarter other than the following class off dealer:

(i)  who has opted for payment of tax under sub­section (2) of section 3 or section 5 of the Act or under a notification issued under sub-section (3) of Section 8 of the Act: or

(ii)   whose annual tax liability [(output tax + purchase tax+ reverse tax) including liability under CST Act, 1956] was Rupees twenty thousand or less in the immediately preceding year. However, where a dealer has opted for payment of tax under sub-section (2) of section 3 or section 5 or under a notification issued under sub-section (3) of section 8 of the Act; may submit return electronically in form VAT-11 through the official web-site of the Department, within one hundred and five days of the end of the year.

Explanation―Quarter means the period of three months ending on 30^th June, 30th September, 31st December and 31st March.

(1A) Every dealer other than those who:-

(i) has opted for quarterly assessment under sub-section (2) of section 23 of the Act; or

(ii) has opted for payment of tax under sub­section (2) of section 3 or section 5 or under a notification issued under sub-section (3) of section 8 of the Act; or

(iii) has filed audit report under sub-section (1) of section 73 of the Act, shall file, within nine months and fifteen days from the end of the relevant financial year, an annual return in form VAT-10A.

(2) The return required to be filed, under sub-rule (1), by a registered dealer shall accompany.―

(a) treasury receipt(s) / bank challan(s) of authorized bank as a proof of deposit of tax;

(b) statement of purchases in Form VAT –07A; and (c) statement of sales in Form VAT -8A;

and the copy of such return(s) generated through official Web-Site of the Department shall be verified by the dealer himself or his business manager by affixing his signature on and shall be submitted to his assessing authority or the officer authorized by the Commissioner, within fifteen days of the last date for filing of such return(s), failure to do so shall be deemed to be a case of non filing of return(s). However, where a dealer files returns alongwith the requisite enclosures electronically by affixing his digital signatures, he would not be required to submit the computer generated copy of return so electronically filed.

(3)Every dealer other than those who:-

(i) has filed audit report under sub-section (1) of section 73 of th Act; or

(ii) has filed audit report under sub-section (1) of Section 73 of the Act; or

(iii) has filed annual return in form VAT-10A

shall submit, the trading account and in case of manufacturer, trading and manufacturing account and the profit and loss account within nine months of the end of the year.

(4) The registered dealer filing return electronically in Form VAT-11 shall also submit, in the prescribed period for filing of return, proof of deposit of tax in case the payment is not made electronically.

(5) Where a dealer has more than one place of business, he shall include in the return, the turnover of the principal place of business as well as the turnover of all other places of business. He shall also furnish the details of turnover of each place of business in Form VAT-13.

(6) Where a dealer discovers any omission or error in any return other than annual return furnished by him, he may furnish a revised return at any time prior to the due date for filing of the immediately succeeding return or receipt of the notice under sub-section (1) of section 24 of the Act, whichever is earlier. However, where a dealer has not opted for quarterly assessment under sub-section (2) of Section 23, he may furnish such revised return prior to the furnishing of the annual return in form VAT-10A or receipt of the notice under sub-section (1) of Section 24, whichever is earlier”

3. The Assessing Authority in the impugned assessment order dtd.22.9.2009 has rejected the said contention of the assessee as under:

4.       The relevant notification dtd.27.2.2009 produced as Annex.10 before this Court is also reproduced hereunder:

 “S. N O.2475F. 16(375) Tax/VAT/CCT/06-373 dated 27.2.2009

In exercise of the powers conferred by sub-rule (7) of Rule 19 of the Rajasthan Value Added tax Rules,  2006, I, B.N. Sharma, Commissioner, Commercial Taxes hereby specify the following class of registered dealers for the purpose of said sub-rule; namely:-

S.NO.                    Class of registered dealers.

1.            Dealers registered under the Companies Act, 1956 (Act No.1 of 1956).

2.            Dealers having more than Rs. 10 lac as net tax payable during the previous year.

 This shall have immediate effect. 1. Subs. For “Dealers whose annual tax liability during the previous year was more than Rs. 10 lac.” by S.No.2486 dated 29.4.2009.”

5. The learned counsel for the petitioner, therefore, submitted that the demand of tax raised against the assesee company denying input tax credit, on the ground of rejection of these declaration forms in VAT 07, 08 and 09 is illegal and hence the impugned assessment order deserves to be quashed in writ jurisdiction.

6. On the other hand, the learned counsel for the Revenue, Mr. Siddharth Tatia on behalf of Mr. V.K. Mathur, drew the attention of the Court towards the amendment of Rule 19 and submitted that the said Sub-Rule (7) was inserted in Rule 19 only by Rajasthan VAT (7^th Amendment) Rules, 2005 w.e.f. 29.8.2008 and Rule 19A also was brought on statute book by Rajasthan VAT (3^rd Amendment) Rules, 2007 on 20.11.2007. He submitted that therefore, in absence of any statutory rules permitting filing of such soft copy through electronic medium, the Assessing Authority could not be faulted in not accepting these soft copy declaration forms. He therefore, justified the demand raised in the matter. He also raised the objection of alternative remedy against the impugned assessment order available to the assessee – company and therefore, prayed for dismissal of the writ petition on the said ground.

7. Having heard the learned counsels, this Court is of the opinion that even though in the era of E-filing of the returns under the various laws, such a practice deserves to be encouraged and is acceptable form of filing of returns to the various Tax Department, it is admitted position before this Court that relevant Rules for filing of soft copies of these returns viz. VAT-07, VAT-08 and VAT-9, particularly assessment year 2007- 2008 and 2008- 2009 were not available on the statue book on the date when they were filed. In the present case, as aforesaid, the relevant amendments in Rule 19 and 1 9A reproduced above were brought w.e.f. 20.11.2007 and 29.8.2008 respectively. The notification Annex.10 placed on record also permits only a particular class of dealers to file such returns electronically. The notification dated 27.2.2009 was given immediate effect and the date admittedly fell after relevant dates of filing of soft copy in the present case viz. On 16.10.2006, 30.11.2006, 28.2.2007 and 31.5.2007 respectively.

8. The assessee dealer may fall in the class of dealers covered under the notification dated 27.2.2009 quoted above, but the question, which arises is, whether such notification can be given retrospective effect or not. The said notification dated 27.2.2009 ex facie does not make it retrospective. It stipulates that same was having immediate effect i.e. w.e.f. 27.2.2009, a date after the relevant dates on which soft copies were filed by the assessee– company in the present case. Therefore, per se on the interpretation of these Rules, it cannot be applied retrospectively. The ground taken by the assessing authority in the impugned assessment order does not seem to be mere technical or a sham ground. It is not for this Court to apply the said Rule or notification retrospectively, merely because the E-filing of returns deserves to be encouraged. The effect of rejection or acceptance thereof, is a matter of procedure governed by the relevant Rules applicable to the facts of each case for the relevant period on the basis of relevant statute and notification available in the statute book. The grievance of the assessee in the present case, cannot be redressed by issuing mandamus to the respondent – department to accept such soft copies on the relevant dates when they were filed, even in absence of specific statutory rules or notification.