The High Court
Case Details
1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (T) No. 5561 of 2023 ----- M/s Linde India Limited, a Public Limited Company through its Authorised Signatory, Mr. Binoy Sharma ...Petitioner Versus 1. State of Jharkhand, through the Secretary, Commercial Taxes Department, Government of Jharkhand, having its office at Project Bhawan, Dhurwa, P.O.-Dhurwa, P.S. Jagannathpur, District-Ranchi. 2. Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Sales Tax Building, P.O. and P.S. Sakchi, Town-Jamshedpur, District-East Singhbhum. 3. Assistant Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Sales Tax Building, P.O. and P.S.-Sakchi, Town-Jamshedpur, District-East Singbhum. 4. State Tax Officer, Jamshedpur Circle, Jamshedpur, having its office at Sales Tax Building, P.O. and P.S. Sakchi, Town- Jamshedpur, District- East Singhbhum. ...Respondents ---- CORAM: HON’BLE MR. JUSTICE RONGON MUKHOPADHYAY HON’BLE MR. JUSTICE DEEPAK ROSHAN --- For the Petitioner : Mr. M.S.Mittal, Sr. Advocate Mr. Salona Mittal, Advocate For the Respondents : Mr. Yogesh Modi, A.C. to AAG-1A ---- RESERVED ON. 04/12/2023 PRONOUNCED ON.06/02/2024 --- Per Deepak Roshan, J Heard learned counsel for the parties. 2. The instant application has been preferred by the petitioner for quashing and setting aside the Re-assessment Order dated 07.09.2021 (Annexure-5) and the consequential demand notice dated 07.09.2021 (Annexure-6), demanding Rs. 2,37,69,924/- in respect of the Assessment Year 2015-16. 3. The brief facts of the case are that the petitioner is primarily engaged in the business of manufacturing and supply of 2 Industrial Gases such as Oxygen, Nitrogen and Argon. The present dispute pertains to the Appellant’s unit situated at Jamshedpur where it is engaged in the manufacture of Industrial Gases. During the relevant Assessment Year i.e. A.Y. 2015-16, regular Assessment proceedings were carried out under Section 35(6) of the Jharkhand Value Added Tax Act (“JVAT Act”), which has resulted in t h e passing of an Order dated 30.03.2019. The claim of the Petitioner for exemption from payment of Value Added Tax on “facility charges” of Rs. 68,91,15,398/- had been disallowed.
Legal Reasoning
The Petitioner subsequently challenged the Assessment Order dated 30.03.2019 in the Appellate proceedings under Section 79 of the JVAT Act. During the pendency of the Appeal, the entire amount in dispute was deposited by the Petitioner under protest. However, subsequently, the Petitioner settled its disputes by applying under the Jharkhand Kar Samadhan Yojna, 2022. In the meanwhile, petitioner was verbally informed by the Department in and around September 2023 that there exists a certain outstanding amount of interest payable by the Petitioner in respect of A.Y. 2015-16, in light of certain Audit Objections. 4. The case of the petitioner is that the Petitioner was not aware of any such Order or Objection. On making enquiries, it was found that the petitioner had received an e-mail on 23.10.2019, containing a notice of hearing dated 16.10.2019, as 3 well as the demand notice dated 07.09.2021. Since the said e-mail went into “Spam Folder” of the Petitioner’s representative, appropriate steps could not be taken. However, no other notice/ Order/Audit were served upon the Petitioner by e-mail except two documents mentioned hereinabove. The inadvertent error resulted due to the fact that the Petitioner had always been in receipt of the physical copies of the notice issued by the Department and hence failed to pay heed to the e-mails lying in the “Spam Folder”. The Petitioner immediately applied for a certified copy of the Order sheet and the Order passed pursuant to the Audit Objection which was made available to the Petitioner on 13.09.2023. 5. The further case of the petitioner is that from perusal of the Order sheet, particularly the first entry on 15.10.2019, it is evident that proceedings have been initiated under Section 42(3) of the JVAT Act. Further, the notice of hearing dated 16.10.2019 (Annexure-4) has also been issued under Section 42 of the JVAT Act. It may be noted that the notice dated 16.10.2019, did not contain a copy of the Audit Objection. Further, from perusal of the Re-assessment Order dated 07.09.2021, (Annexure-5), it became evident that the Audit Objection related to non-levy of Interest under Section 55(4) of the JVAT Act, on the disallowed amount of facility charges of Rs. 69,91,15,398/-. As per the Audit Objection, Interest of Rs. 2,37,69,923/- ought to have been levied upon the Petitioner for a delay of 34 months in deposit of tax on facility charges, despite the fact that the entire amount in dispute had been deposited by the Petitioner. The Assessing Authority has 4 accepted the Audit Objection and proceeded to pass an ex-parte re-assessment order dated 7.9.2021 confirming demand of interest of Rs. 2,37,69,523/-. 6. Learned Sr. counsel for the petitioner made following submissions: (a) Reassessment order is barred by limitation under Section 40(4) read with Section 42(3) of the JVAT Act. He further submits that Section 40(4) of the JVAT Act specifies that no Order of assessment and reassessment shall be made under section 40(1) after the expiry of five years from the end of the year in respect of which the tax is assessable. In this regard reference is made to a recent judgment dated 09.08.2023 passed by this Court in the case M/s. Rungta Mines Ltd. v. State of Jharkhand, W.P.(T) No. 3311 of 2022, wherein this Hon’ble Court has been pleased to hold as under: - “51. A holistic reading of Section 42 would reveal that said provision contains three different situations/circumstances under which re- assessment proceeding can be initiated. So far as Section 42(1) and 42(2) is concerned, the Legislature has deliberately inserted non- obstante clause extending the period of limitation but the Legislature has not extended the period of limitation pursuant to audit objection under Section 42(3). This, in our opinion, has been deliberately omitted by the Legislature as it was conscious that re-assessment proceeding would have been otherwise initiated under Section 40(1) on ‘information being received by the Audit Party’, but the only further requirement was to record ‘reasons to believe’. What has been dispensed with in Section 42(3) is the requirement of recording ‘reasons to believe’ only. It is under the said circumstances, non- obstante clause was not inserted in Section 42(3) extending the period of limitation from the date of receipt of audit objection, and, thus, the period of limitation would be governed by Section 40(1) read with 40(4) of the JVAT Act. 61. Issue No. (ii):- Section 42(3) is to be read with Section 40(4) of the JVAT Act and the limitation prescribed for carrying out re-assessment proceedings would be five years.” 5 (b) Reassessment order being a nullity is without jurisdiction and hence its invalidity can be set up at any time. He further submits before this Court that since the present Order has been passed beyond the period of limitation, it has rendered the entire proceedings as a nullity. In this regard reliance is placed upon the Hon’ble Supreme Court in the case of Commissioner of Income Tax, Chennai v. Alagendran Finance Ltd., reported in (2007) 7 SCC 215 wherein it has been held that: “20. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income Tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalisation fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of Section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been the Commissioner of Income Tax beyond the period of limitation, it was wholly without rendering the entire proceeding a nullity.” invoked by jurisdiction (c) Reassessment order being a nullity is without jurisdiction and hence its invalidity can be set up at any time. He further submits that therefore, the mere fact that the Petitioner inadvertently could not become aware of the Impugned Order dated 07.09.2021, till September 2023, will not make an Order which has been passed without jurisdiction, to be valid in the eyes of law. As stated above, since the Order is a nullity, its invalidity can be set up at any point of time. (d) Alternate remedy is not a bar when the order is wholly without jurisdiction. As far as the objection in relation to the alternate remedy is concerned, he submits that the same is not an inflexible rule. The Court has plenary powers and can exercise its writ jurisdiction despite the existence of alternate remedy in 6 certain situations. The Hon’ble Supreme Court in the case U.P. Power Transmission Corpn. Ltd. v. CG Power & Industrial Solutions Ltd., reported in (2021) 6 SCC 15 has categorically held in para 67 as held as under:- “67. It is well settled that availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly: (i) where the writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where the impugned orders or proceedings are wholly without jurisdiction or (iv) the vires of an Act is under challenge. Reference may be made to Whirlpool Corpn. v. Registrar of Trade Marks [Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1 : AIR 1999 SC 22] and Pimpri Chinchwad Municipal Corpn. v. Gayatri Construction Co. [Pimpri Chinchwad Municipal Corpn. v. Gayatri Construction Co., (2008) 8 SCC 172] , cited on behalf of Respondent 1.” 7.
Legal Reasoning
Learned counsel for the respondent-State has opposed the prayer of the petitioner and has made following submissions: - (a) The Petitioner is guilty of delay and latches in belatedly filing the present Writ petition. (b)
Decision
The Impugned Order is an appealable Order and hence the Writ Petition should be dismissed on the ground of alternate remedy. (c) As regards the Judgment rendered by this Court in the M/s. Rungta Mines Ltd. (Supra) is concerned; it has only been submitted that the Department has taken steps to approach the Hon’ble Supreme Court against the said Order. 8. Having heard learned counsel for the parties and after going through the records, at the outset it is necessary to peruse Section 40(4) of the JVAT Act, which specifies that no order of assessment and reassessment shall be made under section 40(1) after the expiry of five years from the end of the year in respect of which the tax is assessable. In the present case, the Assessment Year is 2015-16 and five years from the end of the relevant year would be 31.03.2021. However, the order in the present case has 7 been passed belatedly on 07.09.2021 and hence is clearly without jurisdiction and barred by limitation. Further, it is imperative to note that the Respondents have specifically admitted that the present reassessment proceedings have been initiated pursuant to an audit objection, under Section 42(3) of the JVAT Act. In this regard it is pertinent to mention here that section 42(3) of the JVAT Act only specifies one of the categories pursuant to which reassessment can be initiated and is therefore also subject to the rigours of limitation as provided under Section 40(4) of the JVAT Act. Such period of limitation of five years cannot be given a complete go-by the Respondents as the stipulation has been inserted by legislature to give finality to proceedings to a certain assessment year. Completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. This issue has already been decided by this Hon’ble Court in M/s. Rungta Mines Ltd. (Supra). It is therefore, beyond cavil that the Order dated 07.09.2021 having been passed beyond the period of limitation, is void and bad in law. 9. Further, reassessment order being a nullity is without jurisdiction and hence its invalidity can be set up at any time. Since the present Order has been passed beyond the period of limitation, it has rendered the entire proceedings as a nullity. In this regard reference is made to a judgment passed by the Hon’ble Apex Court in the case of Commissioner of Income Tax, Chennai v. Alagendran Finance Ltd., reported in (2007) 7 SCC 215. As such, since the Impugned Order was in the nullity, its invalidity could be set up at any time and at any stage. Further, no amount of concession / waiver can give an authority, jurisdiction which it did not possess. By the time the Respondents passed the Impugned Order dated 07.09.2021, it had already become coram non judice. Reference may be made to the 8 Judgment of the Hon’ble Apex Court in the case of Jagmittar Sain Bhagat v. Health Services Haryana, reported in, (2013) 10 SCC 136. The mere fact that the Petitioner inadvertently could not become aware of the Impugned Order dated 07.09.2021, till September 2023, will not make an Order which has been passed without jurisdiction, to be valid in the eyes of law. As stated above, since the Order is a nullity, its invalidity can be set up at any point of time and alternative remedy is not a bar when the order is wholly without jurisdiction. 10. As far as the objection in relation to the alternate remedy is concerned, the same is not an inflexible rule. Now it is well settled that the High Court has plenary powers and can exercise its writ jurisdiction despite the existence of alternate remedy in certain situations. The Hon’ble Supreme Court in the case of U.P. Power Transmission Corpn. Ltd. v. CG Power & Industrial Solutions Ltd., reported in (2021) 6 SCC 15. Therefore, a writ petition would lie against an order which is wholly without jurisdiction. In this regard, that since the question of limitation is a jurisdictional issue and a writ petition would be maintainable; reliance may be placed upon the Judgment of the Hon’ble Apex Court in the case of State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., reported in (2007) 11 SCC 363. 11. As far as recourse by the Department to the Hon’ble Supreme Court is concerned; the Respondents have not brought on record any document to show that a Special Leave Petition has actually been filed. Even otherwise, mere filing of any Special Leave Petition does not amount to stay of the Order of the High Court. The Order of the High Court must be given effect to until and unless the same is stayed by an Order of the Hon’ble Supreme Court. This is well settled by the Judgment of the Hon’ble Supreme Court in the case of Kunhayammed v. State of Kerala, reported in (2000) 6 SCC 359. 12. Before parting it is also pertinent to mention that the Respondents were duty bound to serve a copy of the Audit 9 Objection to the Petitioner along with the show cause notices. Unless and until the Petitioner receives copy of the Audit Objection, an effective reply cannot be furnished. It is well settled that a vague show cause notice lacking details amounts to violation of principles of natural justice as held by the Hon’ble Apex Court in the case of CCE versus Brindavan Beverages (P) Ltd., reported in (2007) 5 SCC 388 – Para 14. “14. There is no allegation of the respondents being parties to any arrangement. In any event, no material in that regard was placed on record. The show-cause notice is the foundation on which the Department has to build up its case. If the allegations in the show- cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show-cause notice. In the instant case, what the appellant has tried to highlight is the alleged connection between the various concerns. That is not sufficient to proceed against the respondents unless it is shown that they were parties to the arrangements, if any. As no sufficient material much less any material has been placed on record to substantiate the stand of the appellant, the conclusions of the Commissioner as affirmed by cegat cannot be faulted.” 13. Having regards to the aforesaid discussions and the judicial pronouncements, Re-assessment Order dated 07.09.2021 (Annexure-5) and the consequential demand notice dated 07.09.2021 (Annexure-6) demanding Rs. 2,37,69,924/- in respect of the Assessment Year 2015-16, are hereby, quashed and set aside. 14. As a result, the instant writ application is allowed and pending I.A., if any, is also closed. (Rongon Mukhopadhyay, J.) (Deepak Roshan, J.) Jharkhand High Court Dated/6/2/ 2024 Amardeep/AFR