The Bombay High Court recently issued an order in the case of Schindler India Pvt. Ltd. vs. State of Maharashtra. The petitioner sought several reliefs through this writ petition, primarily challenging an assessment order passed by the Assessing Officer under the Maharashtra Value Added Tax Act. The key contention of the petitioner was that the assessing officer had not considered the C-Forms and F-Forms submitted by the petitioner during the assessment. This article provides a detailed analysis of the case, focusing on the court’s order and its implications.
Schindler India Pvt. Ltd. filed a writ petition under Article 226 of the Constitution of India, seeking various reliefs. The primary relief sought by the petitioner was to challenge the assessment order dated March 29, 2023, passed by the Assessing Officer under the Maharashtra Value Added Tax Act (MVAT Act). The petitioner contended that the assessing officer had not taken into consideration the C-Forms and F-Forms submitted by the petitioner during the assessment process.
The petitioner’s counsel drew the court’s attention to the assessment order and highlighted that there was no discussion or reference to the C-Forms and F-Forms in the assessment order. The petitioner argued that all relevant details and documents related to these forms had been presented to the assessing officer, and their non-consideration rendered the assessment order defective.
Furthermore, the petitioner pointed out that the Maharashtra Sales Tax Tribunal had issued an order on September 2, 2021, in VAT Appeal No. 12 of 2020, which directed the assessing officer to provide clear identification of the disallowed claim under sub-sections (1) and (2) of Section 6A of the Central Sales Tax (CST) Act. However, the impugned assessment order did not comply with this directive.
During the pendency of the writ petition, the Deputy Commissioner of State Tax had issued an order on August 18, 2023, attaching the petitioner’s current account with CITI Bank. This development was brought to the court’s attention, and the petitioner sought urgent ad-interim orders to stay the attachment.
The court considered the petitioner’s contentions and the documents presented, including letters and a certificate from a Chartered Accountant, which certified the total value of C-Forms issued by various states. The court observed that prima facie, it did not appear correct for the assessing officer to claim that C-Forms worth a substantial amount were not produced.
In light of the petitioner’s arguments and the lack of discussion in the assessment order regarding the C-Forms and F-Forms, the court concluded that the assessment order appeared to be passed without proper application of mind and without considering the materials submitted by the petitioner. The court ordered the assessment order to be quashed and set aside.
The court directed the Assessing Officer to hear the petitioner, consider all materials on record, and pass a fresh assessment order within six months from the date of presenting a copy of the court’s order.
Additionally, the court set aside the attachment of the petitioner’s account by the Deputy Commissioner of State Tax.
In the Schindler India Pvt. Ltd. case, the Bombay High Court quashed an assessment order passed under the Maharashtra Value Added Tax Act due to the assessing officer’s failure to consider C-Forms and F-Forms submitted by the petitioner. The court ordered a fresh assessment, emphasizing the importance of proper application of mind and consideration of materials submitted during assessments. This case highlights the significance of a reasoned and well-considered assessment order in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This petition under Article 226 of the Constitution of India is filed praying for the following reliefs:-
“A. The Hon’ble Court be pleased to declare Section 26(6A)(a) of the Maharashtra Value Added Tax Act, 2002 as ultra vires the Central Sales Tax, 1956 and the Central Sales Tax Rules (Registration and Turnover Rules) of 1957 as well as the Constitution oflndia and consequently strike down the same;
B. The Hon’ble Court be pleased to issue a writ of certiorari and/ or any other appropriate writ, direction or order quashing and setting aside the Impugned Assessment Order dated 29 March 2023 being “Exhibit B” to the Petition;
C. That pending the hearing and final disposal of the Petition, the Hon’ble Court be pleased to stay the operation of the Impugned Assessment Order dated 29 March 2023 being “Exhibit B” to the Petition
D. Ad-interim reliefs in the nature of prayer clause “C” above;
E. That the Hon’ble Court be pleased to direct that any further proceedings pursuant to quashing and setting aside the Impugned Assessment Order dated 29 March 2023 being “Exhibit B” to the Petition, should not be carried on by the Respondent No.2 and the proceedings relating thereto be transferred to any other officer;
F. For costs of this petition; and
G. For such other order as the Hon’ble Court may deem fit to pass in light of the facts and circumstances of the case.”
2. As fairly stated by Mr. Patkar, learned counsel for the petitioner, that prayer clause (a) of the petition is not being pressed. Thus, the adjudication of the petition would be confined to prayer clause (b) which is the only substantive prayer. It is stated that there is a typographical error in prayer clause (b) namely reference to “Exhibit-B” ought to have been to “Exhibit-A”
3. The challenge is to the assessment order dated 29 March 2023 passed by the Assessing Officer, whereby the petitioner has been assessed for tax demand under Maharashtra Value Added Tax. The primary grievance of the petitioner is that in passing the impugned assessment order, the assessing officer has not taken into consideration the C-Forms as also the F-Forms which were produced / submitted by the petitioners in the course of assessment. In this regard, the petitioner has referred to the correspondence and more particularly the letters dated 7 June 2019, 15 September 2019, 11 December 2019, 31 December 2019, 31 October 2022 and 22 November 2022, as also the certificate of the chartered Accountant certifying total value of C-Forms issued by various states to the tune of Rs.37,60,67,284/-
4. Mr. Patkar has drawn our attention to the operative part of the said order which is the only discussion as found in the assessment order which reads thus:-
“In said order Hon’blc MSTT ordered that, “The assessment order passed by assessing authority is set aside and the matter is remanded back to assessing authority to pass fresh assessment order.”
As per instruction given by Hon’ble MSTT, notice in form VI-B issued to dealer on 17/10/2022. In response the notice in form VI-B, Mr Sanjay Vora, CA attended time to time and produced books of accounts.
GTO of Sales is determined at Rs.8202704770/-, sales within the State is at Rs.4216030487/-. C Forms not produced at Rs.371181928/-, F Forms produced but not allowed at Rs. 1675659626/-, F forms not produced at Rs. l784549947/- Amount of CST payable is at Rs.479143541/-. All these figures are determined as per the original assessment order dated 31/03/2020. Legal merits of the assessment are considered in original assessment order dated 31/03/2020 and they are considered and allowed as per the original assessment order.
The clear identification of the disallowance of claim under sub-section (1) and sub-section (2) of section 6A of the CST Act with respect to points mentioned in paragraph 9.3 of the order of Hon’ble MSTT is given as below,
BALANCE TAXABLE 3842371724
TAX RATE [%]
|2.0 10980223||219604||Turnover identification|
|12.5 371181928||46397741||C Forms not produced|
|12.5 1675659626||209457453||F Forms produced but disallowed after verification [Sec 6A (2) of CST Act]|
|12.5 1784549947||223068743||F forms not produced [Sec 6A ( l ) of CST Act]|
Amount paid with return is at Rs.8132556/-. Interest payable u/s 9(2) read with section 30(3) of the MVAT Act, levied at Rs.847966495/-. Excess MVAT refund to be adjusted against CST is allowed at Rs. 10784936/-.
Hence, balance CST payable is Rs. 1308192544/-.
Issue demand notice accordingly.”
5. During the pendancy of this petition, the Deputy Commissioner of State Tax issued an order dated 18 August 2023, attaching the petitioners Current Account with the Citi Bank. It is on such backdrop, the present petition was urgently moved before this Court on 22 August 2023 praying for urgent ad-interim orders. After hearing the learned counsel for the parties, this Court had passed the following order:-
“1. Considering the facts and circumstances of the case and the submissions as made on behalf of the petitioner that C-Forms as also F-Forms were produced, which is also clear from the letters of the petitioner dated 7 June, 2019, 16 September, 2019, 11 December, 2019, 31 December, 2019, 31 October, 2022, 22 November, 2022, as also the certificate of Chartered Accountant, who represented the petitioner before the Assessing Officer annexed at Page 109 certifying that total value of C-Forms issued by various States were in the tune of Rs.37,60,67,284, we are of the opinion that prima facie it does not appear to be correct for the Assessing Officer to observe that C-Forms were not produced to the extent of Rs.37,11,81,928/- and F-Forms were also not produced to the extent of Rs.1,78,45,49,947/-. The petitioner has no quarrel in the present proceedings in regard to F-Forms produced but not allowed.
2. Learned counsel for the petitioner has brought to our notice that during the pendency of this petition, the Deputy Commissioner of State Tax by an order dated 18 August, 2023 has attached the petitioner’s current account held with CITI A copy of the said letter is placed on record.
3. Considering the fact that the petitioner has submitted the requisite C-Forms, which according to the petitioner was overlooked by the Assessing Officer in passing the assessment order, in our prima facie opinion, freezing of the petitioner’s current account is not justified. In these circumstances, we stay the order dated 18 August, 2023 issued by the Deputy Commissioner of State Tax attaching the petitioner’s current account held with CITI Bank. Ordered accordingly.
4. Necessary intimation in that regard be immediately issued by the Deputy Commissioner of State Tax to the Bank Manager, CITI Bank.
5. Stand over to 24 August, 2023.”
6. It is on the above backdrop, the proceedings are before us today. Patkar has reiterated the petitioners grievance in regard to the impugned assessment order to contend that the impugned order does not comply with the observations as made by the Maharashtra Sales Tax Tribunal its order dated 2 September 2021, in VAT Appeal No. 12 of 2020 filed by the petitioner.
7. In such context, our attention is drawn to paragraph Nos. 9.4 to 9.6 of the said impugned order wherein the tribunal has observed that the Assessing Officer is required to take into consideration the details in regard to the turnover as pointed out by the petitioner. The relevant observations of the Tribunal in that regard reads thus:-
“9.4 On the background of the legal position and facts of this case, we have perused the record placed before us. Also the written submission made by both parties. About the second point emerges as mentioned in paragraph 9.1 above, we are of the considered view that the assessing authority has undoubtedly failed to provide clear identification of turnover which is actually disallowed under sub-section (1) and sub-section (2) of Section 6A of the CST Act separately. This aspect of lack of clarity of disallowance of claim of goods transfer for different reasons which causes the difficulty to appellant to prefer an appeal with the First Appellate Authority. This non-classification of disallowance u/sec. 6A of the CST Act also prohibits the appellant to determine the part payment to be made as per section 26(6B) of the MVAT Act.
9.5 Since we have held that the assessing authority has failed to provide identification of turnover against which the appeal may be preferred directly to the highest authority of the State. Therefore, it is not necessary to express any opinion as to whether the appeal could be admitted without part payment as mentioned in First point of paragraph no. 9.1 above. We have not in any manner expressed our opinion about the admission of appeal without part payment due to lack of clarity in respect of issue stated above.
9.6 Finally on the basis of the facts stated above as also the submission made before us, we feel it necessary to meet the ends of justice, to remand back the matter to the assessing authority to provide clear identification of the disallownance of claim under sub-section (1) and sub-section (2) of Section 6A of the CST Act with respect to points mentioned in paragraph 9.3 above.
We have by way of this order decided the only limited point as mentioned in point No.(2) of paragraph 9.1 above. Limited to above aspect we have not expresses any opinion on other legal issues raised or the merit of the case.
We make it clear that this order is given on the facts of the case. In view of the above we are passing the following order,
1. VAT Appeal No.12 of 2020 is partly allowed.
2. The assessment order passed by the assessing authority is set aside and the matter is remanded back to the assessing authority to pass fresh assessment order on the points stated hereinabove and in terms of directions given in paragraph 9.6 above.
3. No order as to costs.”
8. Mr. Patkar would submits that this is a clear case where the assessing officer has completely overlooked the materials which were placed on record of the Assessing Officer and more particularly in relation to the C-Forms and F-Forms which ought to have been taken into consideration and credit should have been given to the petitioner in arriving at the final assessment. It is his submission that there is no discussion whatsoever in the assessment order in regard to such materials although by various letters were filed in the course of the assessment proceedings.
9. The submission is therefore that in the peculiar facts of the case the remedy of an appeal may not be an efficacious alternate remedy to the petitioner when the assessment order passed by the assessing officer itself is defective and not in compliance of the order dated 2 September 2021 passed by the Maharashtra Sales Tax Tribunal.
10. On the other hand, Mr. Takke, learned AGP would support the impugned order. Insofar as the petitioner’s contention that the impugned assessment order does not taken into consideration the materials as submitted by the petitioner in regard to the C-Form and F-Forms, Mr. Takke would fairly states that there is no discussion in the impugned assessment order in that regard.
11. Having heard learned counsel for the parties and having perused the record and the impugned order, we find much substance in the contentions as urged by Mr. Patkar. It is a clear case of the petitioner that all the details in regard to C-Forms and F-Forms were placed for consideration of the assessing officer which ought to have been taken into consideration by the assessing officer in passing the impugned order. We find that the assessment order provides no reasoning whatsoever in this regard. The assessment order neither refers to all such materials as placed on record by the petitioner nor there is a discussion as to why such material ought to be discarded in arriving at the final assessment. The only consequence from such order which is bereft of particulars and any discussion in that regard, would be that the order would be required to be held to be passed in patent non application of mind and materials on record.
12. In the light of the above discussion, the impugned order cannot be sustained, it would be required to be quashed and set aside with a directions to the Assessing Officer to hear the petitioner and after considering all the materials on record, pass a fresh order in accordance with law. Ordered accordingly.
13. Let such exercise be undertaken by the Assessing Officer within a period of six months from the date a copy of this order is presented before the Assessing Officer by the petitioner.
14. All contentions of the parties are expressly kept open.
15. As the assessment order is quashed and set aside, we also quash and set aside the attachment of the petitioners account by the Assessing Officer vide order dated 18 August 2023.
16. The petition stands allowed in the aforesaid terms.