IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1305 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= VIJAYKUMAR DALICHAND - Appellant(s) Versus STATE OF GUJARAT - Opponent(s) =========================================================
Appearance :
MS NIYATI K SHAH for Appellant(s) : 1, MR KABIR HATHI AGP for Opponent(s) : 1, =========================================================
CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI
and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 13/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) By the impugned order dated 19th June 2008 of the Gujarat Value Added Tax Tribunal, Ahmedabad, passed in Second Appeal No.32 of 2003, the Tribunal upheld the order dated 30.11.2002 of the Assistant Commissioner of Sales Tax and order dated 31.03.2000 of the Sales Tax Officer, dismissed the assessee's appeal, by confirming the penalty imposed.
1.1 While admitting the present appeal, this court formulated the following two substantial questions of law for consideration and determination:
“1. Whether the Tribunal was justified in confirming the penalty of Rs.2000/- imposed by the STO under section 46(2) of the Gujarat Value Added Tax, 2003 notwithstanding the fact that the assessment was barred by limitation.
“2. Whether the Tribunal below committed substantial error of law in confirming the order of STO as well as the order of the Assistant Commissioner of Sales Tax notwithstanding the fact that the notice issued by the STO was without any date and date of hearing was fixed without giving statutory period of 15 days prescribed under the Rules.”
2. Heard learned advocate Ms. Niyati Shah for the appellant, and learned Assistant Government Pleader Mr. Kabir Hathi appearing for the respondent.
3. The facts in the background available from the record of the appeal are that the assessee was doing business of resale of oilcake. In respect of Assessment Year 1993-94, in reassessment proceedings, the Sales Tax Officer raised demand for Rs.2,000/-. The challenge to that, which was initially filed, was within the limitation, but the application was dismissed for default and thereafter the application for restoration of the applicant having been allowed, the case was taken up for hearing. The Assistant Sales commissioner by his order dated 30.10.2002 dismissed the appeal under section 65 of the Gujarat Sales Tax Act, 1969 confirming the order of the Sales Tax Officer.
3.1 The Sales Tax Officer imposed penalty of Rs.2,000/- on the appellant- assessee under section 46(2) of the Gujarat Sales Tax Act, 1969 by order dated 27.09.1999. Section 46 of the Act deals with the imposition of penalty for contravening certain provisions. As stated above, the assessee's appeal before the Assistant Commissioner of Sales Tax was rejected and thereafter second appeal was preferred by the assessee before the Tribunal which was dismissed as per the impugned order. It may be stated to complete the narration of facts that initially the appellant had filed a writ petition before this court to challenge the order of the Tribunal, which was withdrawn in order to file the statutory appeal and accordingly the present appeal is preferred.
4. The contention inter-alia raised by the learned advocate for the appellant Ms. Shah was that 15 days notice as required under the Rules was not given in the original proceedings and due to that the original demand notice itself was tendered bad and the consequential proceedings were illegal.
5. Rule 34 of the Gujarat Sales Tax Rules, 1970, deals with notice under section 41 of the Act. Similarly, Rule 35 deals with notice under sub-
sections (5) and (6) of section 41. Rule 36 is with regard to notice to be given under section 44, 45, 46. These rules contemplate that the notice and the date fixed for compliance with the notice shall not be earlier than 15 days from the date of service thereof. In other words, clear 15 days period is required to be provided between from the date of service of the notice and the date of compliance i.e. fixing the date of hearing before the authority in the respective proceedings.
5.1 Rule 34 is extracted hereunder.
“34. Notice under sub-section (3) of section 41.
The notice required by sub-section (3) of section 41 shall be in Form 36 and the date fixed for compliance with the notice shall not be earlier than fifteen days from the date of service thereof.
Provided that a date earlier than aforesaid may be fixed, if the dealer or his agent agrees thereto in writing.”
Similarly, Rule 35 of the Rules dealing with notice under sub-section (5) and (6) of section 41 of the Act inter-alia provides that the date fixed for compliance with the notice shall not be earlier than 15 days from the date of service thereof.
6. On the aspect of compliance of the statutory notice period, the Tribunal in its impugned order has observed as under.
“The appeal was listed for hearing on Dt. 15/05/08 when it was stated that the notice in Form no. 36 was undated and was served on Dt. 14/05/99 and hearing was fixed on Dt.18/05/99. Thus, the statutory period of 15 clear days notice was not given. In any case order was passed much after that on Dt. 31/03/2000 and the said order is an order passed after the case was remanded by the appellate authority as can from the assessment order.”
6.1 Having admitted that the 15 days notice was not given, the Tribunal reasoned that the order was passed after long lapse of time and further that it was not the case of the appellant that adequate opportunity was not afforded to him or that there was a miscarriage of justice. The Tribunal observed that the appellant had not shown as to why a separate notice for penalty was necessary when notice in form No.36 referred to the penalty as well.
7. From the facts on record, it is evident that in the proceedings before the Sales Tax Officer, the notice was served on the assessee on 14.05.1999, which was an undated notice. After service of that notice on 14.05.1999, the hearing was fixed on 18.05.1999, which was within 4 days. From these dates, it is manifest that there was no clear notice of 15 days given to the assessee, which was a condition precedent under Rule 34 of the Rules. The object of 15 days statutory period is to avail the assessee a sufficient period so that the assessee could defend its case properly. The requirement thus embodies natural justice and sub-serves the principle of reasonable opportunity.
8. When the relevant Rule prescribed a particular period to be given in between the notice and the date to be fixed for hearing, and the same was evidently not complied with, it amounted to denial of reasonable opportunity to the assessee mandated in the statutory rule. The Tribunal was not justified in its reasoning that notwithstanding the breach, there was no denial of opportunity and no injustice could be complained. The contravention of statutory requirement entitles the assessee to successfully contend that a prejudice was caused to him. Therefore, as the statutory requirement of 15 days clear notice was not observed, the proceedings stood vitiated. The Tribunal committed an error of law in disregarding this material aspect.
9. In light of above discussion, it is held that the Tribunal committed substantial error of law in confirming the order of Sales Tax Officer as well as the order of the Assistant Commissioner notwithstanding the fact that the notice issued by the authority was without any date and the hearing was fixed without making available the statutory period of 15 days prescribed under the Rules. The second question is accordingly answered in affirmative in favour of the assessee. As the second question is answered as above in favour of the assessee holding that the proceedings were vitiated for want of requisite statutory notice, and the impugned order of the Tribunal is being set aside on that ground, the first question does not survive for consideration, ending up in favour of the assessee.
10. For the foregoing discussions, the impugned order of the Tribunal is set aside and the appeal is allowed.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.) (SN DEVU PPS)