Reserved Case :- WRIT TAX No. - 760 of 2017 Petitioner :- M/S Flipkart India Pvt. Ltd. Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Nishant Mishra,Tarun Gulati Counsel for Respondent :- C.S.C.
Hon'ble Bharati Sapru,J. Hon'ble Piyush Agrawal,J.
(Delivered by Hon'ble Piyush Agrawal, J.)
By means of present writ petition the petitioner has prayed for quashing of the orders dated 31st March, 2017 for the assessment year 2012-13 and 2013-2014 both under U.P. Vat Act as well as under Central VAT Act.
Heard Mr. Ravi Kant, Senior Advocate assisted by Mr. Nishant Mishra and Mr. C.B. Tripathi, special counsel for the State of U.P.
The petitioner is a company incorporated under the provision of Indian Companies Act, 1956. Petitioner an online Agency engaged in marketing and selling of consumer goods is registered under U.P. Value Added Tax, Act 2008 (hereinafter referred to as 'Act 2008') and Central Sales Tax Act, 1956 (hereinafter referred to as 'CST Act'). The business of petitioner is that it buys goods from various dealers across the country and sells the same to other dealers in the State of U.P. as alleged throughout India. Apart from business and trading of goods petitioner is also engaged in providing warehousing and various other services to sellers registered on the portal www. flipkart. com wherein, petitioner manages inventory, packaging and invoicing for said sellers.
Under the registration documents of petitioner under Act 2008 and CST Act his address was mentioned as Cabin No. 2 First Floor, G-50 Sector-3, Noida,.
The petitioner have changed its address from the present address to D-510-513, Buffer Godown Compound, Devi Mandir Road, Dasna, Ghaziabad.
Thereafter, the petitioner intimated the respondent for change/amendment of the address in the registration certificate instead of the amending and passing order on the said application and ex-parti provincial assessment orders were passed for the assessment year 2012-13 (4) U.P. under Act 2008 and CST Act.
On the basis of an ex-parte assessment order certain amounts were also withdrawn from the Bank amount of the petitioner.
The petitioner had preferred a writ petition No. 80 and 168 of 2016 and the same was allowed and the ex-parte assessment orders were quashed with heavy cost of two lac.
Thereafter, on 31st March, 2017 again an ex- parte assessment orders were passed for assessment year 2012-13 and 2013- 14 both under Act 2008 and CST Act and the said assessment order have been passed ex-parte without any service of notice upon the petitioner or opportunity of being heard provided therein.
Learned senior counsel of the petitioner submits that this is a 3rd round of litigation forcing the petitioner to approach this Hon'ble Court as the respondents are bent upon to serve the notice not on the new address intimated to them but on the old/earlier address that too notice by affixation in gross violation of the provision of Rule 72 of the U.P. VAT Rules.
It is submitted that the impugned orders have been passed by the respondents are wholly without jurisdiction and gross violation of principle of natural justice.
It is further argued that the assessment orders for the assessment year 2012-13 both under Act 2008 and CST Act are being passed after the expiry of period of limitation prescribed under Section 29 (6) of the Act and therefore the orders are liable to be set aside.
Learned counsel further submits that the normal limitation starts from 31st March, 2013 which ends on 31st March, 2016 but as per limitation prescribed under Section 29(6) of the Act ends on 30th September, 2016. Since, the impugned orders have been passed on 31st March, 2017 and the assessment orders were received on 12.10.2017, therefore, the assessment orders are vitiated and are liable to be set aside as barred by limitation.
Learned counsel for the respondent could not justify the action of the respondent passing the orders for the assessment year 2012-13 both under Act 2008 and CST Act in question after the expiry of period of limitation as provided under Section 29(6) of the Act.
In view of above mentioned facts that the limitation as prescribed under Section 29(6) of Act 2008 for the assessment year 2012-13 has expired. On 13th September, 2016 and the impugned orders both under Act 2008 and CST Act for assessment year 2012-13 have been passed on 31st March, 2017 which are apparently much beyond the period of limitation prescribed therein. Therefore, the impugned orders for the assessment year 2012-13 both under Act 2008 and CST Act are hereby quashed.
The learned Senior Counsel now raised an objection for the order passed for the assessment year 2013-14 both under the Act 2008 and CST Act.
It is submitted that in spite of the fact that the petitioner's address have been changed and the respondent were duly intimated about the said change of address, the respondents neither serve the copy of notice upon the petitioner on its new address nor any intimation was given before passing of the impugned order dated 31st March, 2017 for the disputed assessment year.
It is further argued that even though the complete procedure have been prescribed under Rule 72 of U.P. VAT Rules about the service of notice before taking any action against the petitioner but the same has not been complied with and in gross violation of the said Rule the notice of assessment in question have been served by affixation which is not permissible under the Act 2008 and Rules.
Learned counsel for the respondents have supported the impugned order and tried to justify the action of the respondent in passing the assessment order.
We have perused the record of the case before proceeding further it may be pointed out that in earlier two round of litigation the similar question arose about the service of notice on the earlier address and not on the new address from where the petitioner is doing its business and this Hon'ble Court has deprecated the method adopted by the respondent by not only quashed the orders but also imposed heavy cost upon the respondent. The Hon'ble Court in the case of petitioner while allowing the Writ Nos. 80 and 168 of 2016 have observed as under:
“22. The respondents have tried to justify the assessment orders contending that proper service was made by refusal as well as by affixation and there was no illegality in the service of the summons. It was also urged that the petitioner has a remedy of filing an appeal against the assessment orders and that it was not necessary to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India.
23. Having heard the learned counsel for the parties, we are of the opinion that the rule of alternative remedy is not a bar for entertaining the writ petition. No doubt it is a rule of discretion but in the instant case, we are of the opinion that there would be a travesty of justice if we relegate the petitioner to the alternative remedy of an appeal. We are of the opinion that justice is required to be done at the earliest. We find that there is a total abdication by the respondents in adhering to the process of service of summons under Rule 72 of the Rules. Rule 72 of the Rules has been ignored and a procedure which is not known to law has been adopted. For facility, the Rule 72 of the Rules is extracted hereunder:-
24. Rule 72(a) of the Rules provides that the service of summons is required to be made on a dealer or a person concerned in person or his agent. In the instant case, the report of process server indicates that there was no Firm at the Noida address. At the Ghaziabad address, the process server met one person, who refused to divulge his name but clearly indicated as to which person would receive the notice. The process server, however, indicates service by refusal. In our opinion, the report of the process server is wholly illegal. There is no finding that the person who refused to accept the notice was a dealer or a person concerned in person or an agent empowered to accept the notice. In the absence of any report to this effect we are of the opinion that there is no valid service by refusal.
29. The recall application for recall of the assessment order was rejected by the assessing authority on the ground that the application was filed beyond the stipulated period of 30 days since service of the assessment order by affixation was made on 17.12.2015 at Noida. The Assessing Authority had also rejected the recall application on the ground that the admitted tax of Rs. 3.3 crore was not deposited which is a mandatory requirement as per Section 32 of the Act. On this issue, we are of the opinion that Assessing Authority committed a manifest error in rejecting the recall application. For facility, section 32 is extracted hereunder:-
35. Before parting, we must observe the manner in which the respondents have proceeded with the assessment and recovered the amount from the petitioner's Bank account in haste is deplorable and in gross violation of the provisions of the Act. We find that for the assessment years 2011-12, 2013-14 and 2014-15 ex-parte assessment orders were made without adequate service of notices upon the petitioner. These assessment proceedings were set aside in appeal on the short ground that the service of the summons were sent at the address where the petitioner was no longer carrying on its business. Inspite of this knowledge, the respondents chose deliberately to serve the notice for provisional assessment for the period April to October, 2015 upon the petitioner at the Noida address knowing fully well that the petitioner was not carrying any business from the Noida address. The respondents knew very well that the petitioner had shifted its place of business from Noida to Ghaziabad as they made a futile attempt to serve the notice at Ghaziabad but later for the reasons best known to them, chose deliberately to serve the notice by affixation at the Noida address. Such tactics adopted by the assessing authority in getting the service effected upon the petitioner was in gross violation of Rule 72 of the Rules.
36. We also find that the entire exercise of service was done within four days without taking recourse to the other mode of service, namely simultaneously service by registered post with acknowledgement due. The assessment order indicates that the first and last date of hearing of the assessment proceedings was 10.12.2015 and that the assessment order was passed on 15.12.2015. The counter affidavit reveals that the assessment order was served by attachment at the Noida address. This was done deliberately by the respondents so that the respondents could withdraw the amount through garnishee notices by exerting pressure upon the bank authorities. The Court gets an uncanny feeling that a deliberate attempt was made by the respondents to withdraw the money from the petitioner's bank account through dubious mean by passing ex-parte assessment orders and not allowing it to be served validly upon the petitioner. If in this cavalier fashion the Commercial Tax Department functions and withdraws huge sums of money without valid service, it would be difficult for big business houses to carry on their business. Such business houses would be forced to shift their business outside the State of Uttar Pradesh.
37. Consequently, the petitioners are entitled for cost. The writ petitions are allowed with cost amounting to Rs. 2,00,000/- (Rupees two lakhs only), which will be paid by the Commercial Tax Department to the petitioner within two weeks from the date of filing of a certified copy of this order. If the amount is not paid, it would be open to the petitioner to move an appropriate application in this petition.”
Thereafter, again a writ Petition No. 546 of 2016 was allowed with a cost being imposed on respondent of Rs. 50,000/. The Hon'ble Court has observed us under:
“16. We however required him to tell us as to how respondent 1 could dare to pass further assessment orders, when earlier orders passed by him were declared without jurisdiction by this Court by referring to the similar application of petitioner for change of business address. In reply thereto a very bulky counter affidavit has been filed separately by respondent 1. Despite he could not explain as to what was the occasion for any confusion when the needs were very clearly disclosed and decided in Courts' judgment dated 29.02.2016 and why respondent 1 was in so such a hurry so as to pass the impugned assessment orders on 04.05.2016.
18. In these facts and circumstances we are satisfied that here is a forced litigation by unmindful illegal act on the part of respondent 1 and realizing the same he has also withdrawn the impugned orders and also considered the fact he is an authority which was already adversely commenced by this Court in its order dated 29.02.2016 still he did not care to such observations. It is again a fit case where respondent 1 himself would be saddled with cost by this litigation. Since the impugned order of assessment have already been recalled by order dated 23.07.2016 in this regard no further order is required but we hold that respondent 1 being guilty of compelling and forcing second round of litigation upon petitioner must be saddled with cost which we quantify to Rs. 50,000/-.
19. We also direct Principal Secretary, Trade Tax, U.P. Government to look into the manner in which respondent 1 has functioned in this case and despite strictures and penal cost imposed by this Court in earlier judgment dated 29.02.2016 and also directing Commissioner Trade Tax to get an inquiry conducted against erring officials, respondent 1 has not cared to mend his ways to conduct but has proceeded to harass a dealer like petitioner and appropriate disciplinary action be taken at the earliest and finalise the same. It may also be considered by Principal Secretary, Trade Tax, U.P. Government as to whether, respondent 1 is a person fit to be assigned such important quasi-judicial functions.”
Admittedly, the two judgments shows the working of the departmental authorities and the manner in which they are working is not in the interest of either parties.
The case in hand also service of notice has been made by affixation on the earlier address of the petitioner in spite of the fact being within their knowledge that the petitioner have changed the place of business to the new address but still with a mind set of passing the order hurriedly passed an ex-parte order under Act 2008 and CST Act creating huge demand against the petitioner.
This Hon'ble Court in the case of Sri. Balaji Enterprises vs. Commissioner Commertial Tax U.P. Lucknow Sales/Trade Tax Revision No. 496 of 2015 decided on 23rd November, 2015 to interpret as to how under Rule 72 the notice is to be served and held as under:
"The record reveals that a notice through process server was sent to the assessee revisionist but the same was not accepted and the service was deemed to be sufficient by refusal. However, there is nothing on record to show that any notice of the proceedings was sent to the assessee revisionist by registered post.
Rule 72 of the Rules framed under the Act provides for the mode of service of notice of the proceedings under the Act.
In addition to the service of notice of the proceedings through process server Sub-Rule (h) of Rule 72 provides that the authorities shall simultaneously issue notice, order or summon for service by post.
The aforesaid Sub-Rule (h) of Rule 72 of the Rules clearly envisages that in addition to the personal service through process server, sending of notice by registered post is mandatory.
This mandatory provision has not been followed in the present case as is evident from the record produced.
In view of the aforesaid facts and circumstances, the contention of assessee revisionist that he was not served with any notice of the proceedings has force. Accordingly, as the service of notice by post is mandatory and in addition to service by process server, the above question is answered in favour of the assessee revisionist and against the revenue holding that the authority was not competent to cancel the registration of the assessee/revisionist without issuing notice to him by registered post simply on the basis of service of process server by refusal."
The Division Bench judgement in the case of petitioner itself and Sri Balaji Enterprises (supra) a clear procedure for service on notice has been prescribed which has not been followed by the respondent in the case in hand.
The record further reveals that the notice by affixation has been made on the earlier address of the petitioner even without satisfying the conditions as mentioned in the Rule. Even after service of notice by affixation, no such report has been brought on record as provided under the Rules.
In spite of the fact being within the knowledge of the respondent that the petitioner has changed the place of business to the new address still notice by affixation has been made in the earlier address. This fact is also came to the notice of this Court in earlier two rounds of litigation filed by the petitioner in Writ Nos. 80 and 168 of 2016 and Writ No. 546 of 2016 which has been allowed with the cost of Rs. 2 lac and Rs. 50,000/-.
The record further reveals that the impugned order has been passed in gross violation of the provision of the Act and without proper service of notice upon the petitioner. The said fact could not also be disputed by the learned counsel for the respondent.
In view of the facts and circumstances of the case as stated above, the impugned order dated 31.3.2017 for the assessment year 2013-14 under the U.P. Act 2008 and CST Act are hereby set aside.
It is made clear that respondents are permitted to initiate the proceeding by issuing notice at the current address of the petitioner, if any, in accordance with law.
The writ petition is accordingly allowed.
Order Date :- 28.8.2019 SY