Laxmi Cement (A Division of JK Corp Ltd.) V. The Assistant Commissioner, Commercial Taxes Department, Anti Evasion Circle, Pali

CW/3529/1999

AI Insights

The case involves M/s. Laxmi Cement, which challenged a show cause notice issued by the Assistant Commissioner of the Commercial Taxes Department, alleging unauthorized tax refunds to dealers. The petitioner argued that the provisions cited in the notice (Sections 28, 63, and 65 of the Rajasthan Sales Tax Act, 1994) were inapplicable as they had not evaded tax but were following trade practices of issuing credit notes for discounts. The respondent contended that the petition was not maintainable as an alternative remedy was available through appeals under the Act. The court decided not to interfere at the show cause notice stage, advising the petitioner to pursue the available legal remedies post the final order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 805670 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 21-03-2024
• Assessment Year: misc
• Other Referred Cases: Deputy Commissioner of Sales Tax Vs Motor Industries Com., M/s Universal Cylinders Limited Vs The Commercial Taxes Officer, M/s Southern Motors Vs State of Karnataka & Ors., M/s IFB Industries Ltd. Vs State of Kerala, Union of India & Ors. Vs Coastal Container Transporters Association & Ors., State of Punjab Vs M/s Shiv Enterprises & Ors., Union of India Vs Bajaj Tempo Ltd. & Ors., Genpact India Private Ltd. Vs Deputy Commissioner of Income Tax & Anr., M/s Fine Mineral Industry Vs State of Rajasthan & Ors.
• Laws Referred To: Rajasthan Sales Tax Act, 1994, Central Sales Tax Act, 1956, Rajasthan Taxation Tribunal Act, 1995
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: HEMANT DUTT
• Assessee Lawyers: PANKAJ BOHRA; RAHUL SHARMA
• Keywords: Credit notes; Provisional Assessment; Show cause notice; Tax refund; Trade discount; Penalty for unauthorized collection of tax
• Section: 63; 28; 8; 9; 85; 84; 65

Judgement Text

"[2024:RJ-JD:10453-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 3529/1999 M/s. Laxmi Cement (A Division of JK Corp Ltd.), Jaykaypuram, District Sirohi. ----Petitioner Versus The Assistant Commissioner, Commercial Taxes Department, Anti Evasion Circle, Pali. ----Respondent For Petitioner(s) : Mr. Pankaj Kumar Bohra, with Mr. Rahul Sharma. For Respondent(s) : Mr. Hemant Dutt. HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE MUNNURI LAXMAN Judgment Reserved on 28/02/2024 Pronounced on 21/03/2024 1. The petitioner in this case (originally, preferred as original application under Section 8 of the Rajasthan Taxation Tribunal Act, 1995) is claiming the following reliefs: “(a) allow the above original application; (b) quash the impugned notice dated 26.2.98 (Annex.2 & 3) issued by the Assistant Commissioner, Commercial Taxes Department, Anti Evasion, Pali (respondent); (c) restrain the respondent from taking any further proceedings/action in pursuance of his impugned show cause notices or pass any orders in pursuance thereof; (d) grant such further relief/reliefs which in the facts and circumstances of this case may do complete justice to the petitioner; and (e) award costs of this original application.” [2024:RJ-JD:10453-DB] (2 of 7) [CW-3529/1999] 2. The petitioner is a public limited company registered under Companies Act and having its registered office at Jaykaypur, District Rayada, Orissa and its said Lakshmi Cement Division (petitioner) at Jaykaypuram, District Sirohi (Rajasthan). The two unit, i.e. Lakshmi Cement Unit-I and Lakshmi Unit-II of the petitioner division are engaged in the business of manufacturing and selling of Portland cement. The petitioner is a registered dealer under Rajasthan Sales Tax Act, 1994 (in short, ‘Act of 1994’) as well as Central Sales Tax, 1956 vide registration No. RST/CST 2542/00052/SP dated 18.02.1980. 2.1. Both the aforementioned Units have their authorized dealers and distributors in and outside the State of Rajasthan, and that, the petitioner has allowed trade discounts to its authorized dealers during the year of 1996-1997 (01.04.1996 to 31.03.1997). Thereafter, the respondent conducted inspection at the petitioner’s factory premises on 28.01.1998 and the petitioner furnished all the details of taxable turnover under all the categories to the respondent as per the prescribed proforma on 16.02.1998. 2.2. As per the details furnished by the petitioner and by taking out the figures of tax effect in regard to credit notes issued during the year regarding the sales return as well as credit note given on account of trade discount, the respondent issued impugned show cause notice dated 26.02.1998 under Sections 28, 63 & 65 of the Act of 1994 read with Section 9 of the Central Sales Tax Act, 1956 (in short, ‘Act of 1956’) to the petitioner wherein it was alleged that the petitioner has refunded Rs.23,33,143/- Rajasthan Sales Tax (RST) and Rs.1,08,218/- Central Sales Tax (CST) to its dealers out of collections of tax during the years in question and adjusted [2024:RJ-JD:10453-DB] (3 of 7) [CW-3529/1999] the amount in subsequent months, and therefore, the petitioner was called upon to explain as to why the tax amount be not forfeited and penalty for evasion be not imposed. The petitioner filed a preliminary objection to the impugned notice on 23.03.1998. 3. Learned counsel for the petitioner submitted that the impugned notice was served under Section 28 of the Act of 1994, which provides for provisional assessment in case of avoidance or evasion of tax; while doing so, an assessing authority determines taxable turnover of the dealer on which tax has been avoided or evaded or has not been paid according to law, which is not the case herein, and therefore, the said provision is not applicable in the present case. 3.1. Learned counsel further submitted that Section 63 of the Act of 1994 provides for penalty for unauthorized collection of tax, which is also not attracted in the present case, because the impugned notice does not state anything, which could warrant invocation of the said provision of law in the present case. It was also submitted that giving credit notes on account of discount etc. to the authorized dealers and their selling cement as tax paid goods does not come under the purview of Section 63 of the Act of 1994. 3.2. Learned counsel also submitted that the impugned notice was served on the ground that there is refund of tax amount to the authorized dealers on account of giving credit notes in their running account. It was further submitted that there is no dispute about that credit notes have been issued to the dealers by the petitioner, in accordance with the accepted trade practice, and [2024:RJ-JD:10453-DB] (4 of 7) [CW-3529/1999] therefore, there is no question of shifting of burden of the amount, or committing violation of any law. 3.3. Learned counsel further submitted that Section 65 of the Act of 1994 is also not applicable in the present case because the petitioner has not concealed any particulars or relevant/material information, rather furnished all details of the tax to the respondent, and therefore, the impugned action of the respondent is not justified in law. 3.4. In support of such submissions, learned counsel relied upon the following judgments passed by the Hon’ble Apex Court:- (a) Deputy Commissioner of Sales Tax Vs Motor Industries Com. (1983) 2 SCC 108; (b) M/s Universal Cylinders Limited Vs The Commercial Taxes Officer (Civil Appeal No. 2431/2018, decided on 23.02.2018); (c) M/s Southern Motors Vs State of Karnataka & Ors. (Civil Appeal Nos. 10955-10971/2016, decided on 18.01.2017); (d) M/s IFB Industries Ltd. Vs State of Kerala (Civil Appeal Nos. 2516-2517/2012, decided on 27.02.2012) 4. On the other hand, learned counsel appearing on behalf of the respondent, while opposing the aforesaid submissions made on behalf on the petitioner, submitted that the present petition is not maintainable because there is an alternative remedy available to the petitioner, in the manner that the final order of the Assessing Authority is appealable under Section 84 of the Act of 1994 and thereafter, the second appeal under Section 85 of the Act of 1994 before the Tax Board, and that, the petitioner without availing the said remedy, has directly approached this Hon’ble [2024:RJ-JD:10453-DB] (5 of 7) [CW-3529/1999] Court, which is not permissible under the law and thus, the present petition is not maintainable and liable to be dismissed. 4.1. Learned counsel further submitted that at the time of inspection so carried out by the authority, an information was sought from the dealer as to the amount of tax sought to be refunded to the purchasing dealer during the assessment years 1996-1997 & 1997-1998 by issuance of credit notes. It was further submitted that the respondent also issued notices dated 04.02.1998 & 09.02.1998 seeking the information from the petitioner, but the petitioner did not furnish the completed details; however, after getting certain details, the respondent found that tax collected and deposited which is said to be refunded to the dealers and adjusted in subsequent months, was liable to be forfeited under Section 63 of the Act of 1994. 4.2. It was also submitted that the respondent gave proper opportunity of hearing to the petitioner, and thereafter, the impugned notice was issued, which is justified in law. It was further submitted that on the basis of the show-cause notice, the petitioner cannot invoke under the writ jurisdiction, and therefore, the writ petition is not maintainable. 4.3. In support of such submissions, learned counsel relied upon the following judgments :- (a) Union of India & Ors. Vs Coastal Container Transporters Association & Ors. (2019) 20 SCC 446; (b) State of Punjab Vs M/s Shiv Enterprises & Ors. (Civil Appeal No. 359/2023, decided on 16.01.2023) passed by the Hon’ble Apex Court; (c) Union of India Vs Bajaj Tempo Ltd. & Ors. (1998) 9 SCC 281; [2024:RJ-JD:10453-DB] (6 of 7) [CW-3529/1999] (d) Genpact India Private Ltd. Vs Deputy Commissioner of Income Tax & Anr. (Civil Appeal No. 8945/2019, decided on 22.11.2019) passed by the Hon’ble Apex Court; (e) M/s Fine Mineral Industry Vs State of Rajasthan & Ors. (S.B.C.W.P. No. 7943/2007, decided on 18.01.2022) passed by this Hon’ble Court. 5. Heard learned counsel for the parties as well as perused the record of the case, alongwith the judgments cited at the Bar. 6. This Court observes that the petitioner is engaged in the business of manufacturing and selling of Portland cement. The petitioner is having two units and both the units have their authorized dealers and distributors in and outside the State of Rajasthan. The petitioner has allowed trade discounts to its authorized dealers during the years 1996-1997 (01.04.1996 to 31.03.1997). Thereafter, the respondent conducted the inspection at the petitioner’s factory premises and the petitioner furnished all the details of taxable turnover under all categories to the respondent in the prescribed proforma on 16.02.1998. As per the details furnished by the petitioner and by taking out the figures of tax effect in regard to credit notes issued during the years in question regarding the sales return as well as credit notes given on account of trade discount, the respondent issued the impugned show cause notice to the petitioner. 7. This Court further observes that the impugned show cause notice was communicated to the petitioner and the reply thereto was also submitted by the petitioner, but as yet, no final order in [2024:RJ-JD:10453-DB] (7 of 7) [CW-3529/1999] the matter has been passed by the respondent on count of the fact that the interim order dated 22.04.1998 passed by this Hon’ble Court is operating in this case. 8. This Court also observes that as per the settled proposition of law, normally, the writ Court should not interfere at the stage of issuance of show cause notice by the authorities concerned, as in such cases, the parties concerned get ample opportunity to put forth their legal issues before the authorities concerned. 9. Thus, in light of the aforesaid observations and looking into the factual matrix of the present case, this Court disposes of the present petition, with liberty to the petitioner to avail the remedy as available to it under the law and to raise all the legal issues as raised herein and other issues, if any, before the appropriate forum, strictly in accordance with law, after passing of the final order by the respondent in the matter. All pending applications stand disposed of. (MUNNURI LAXMAN),J (DR. PUSHPENDRA SINGH BHATI),J SKant/- "