1996 (3) TMI 503 - AT - VAT and Sales Tax

Tribunal quashes demands for non-compliance, orders fresh proceedings.

The tribunal quashed the demands raised under sections 14(3) and 17(1) in forms VIII and X issued on December 30, 1994, as the proceedings were conducted ... - Issues Involved:1. Legality of the notice in form X demanding Rs. 1,227 for short levy under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972.2. Legality of the notice in form VIII demanding Rs. 2,22,728 under section 14(3) of the same Act.3. Whether the principles of natural justice were adhered to in the assessment and imposition of penalties.4. Validity of the proceedings initiated under sections 14(3) and 17(1) of the Act of 1972.Detailed Analysis:1. Legality of the notice in form X demanding Rs. 1,227 for short levy:The applicant challenged the notice in form X demanding Rs. 1,227 on the grounds of short levy under section 17(1) of the Act of 1972. The applicant argued that the proceedings were illegal and without jurisdiction since he had already paid the tax on the enhanced value of the goods declared. The respondents contended that the notice was issued after discovering that the value declared for some packages was less than the prevailing market value, resulting in a short levy of tax.2. Legality of the notice in form VIII demanding Rs. 2,22,728 under section 14(3):The applicant also contested the notice in form VIII demanding Rs. 2,22,728 under section 14(3) of the Act of 1972, asserting that the entire proceeding was illegal as tax had been paid on all goods brought into the area. The respondents maintained that the notice was issued after finding that the applicant had brought goods without paying the necessary entry tax, and penalties were imposed accordingly.3. Adherence to principles of natural justice:The applicant's advocate argued that the assessment and imposition of penalties were done without adhering to the principles of natural justice and without providing an opportunity for a hearing. The respondents countered that the applicant had submitted an explanation letter and had requested an instant completion of assessment, which was done accordingly. However, the tribunal found that the assessment and penalty imposition were completed on December 23, 1994, without providing the applicant an opportunity for a hearing as required by rule 16(6) and rule 23(1) of the Entry Tax Rules.4. Validity of the proceedings under sections 14(3) and 17(1):The tribunal concluded that the proceedings under sections 14(3) and 17(1) were conducted without complying with the statutory requirements of giving notice and an opportunity for a hearing. The assessment and calculation of short levy were done behind the back of the dealer, which was against the principles of natural justice. Consequently, the demands raised by the notices in forms VIII and X issued on December 30, 1994, were quashed.Conclusion:The tribunal allowed the application, quashing the demands raised under sections 14(3) and 17(1) in forms VIII and X issued on December 30, 1994. Fresh proceedings were directed to be initiated, complying with the statutory requirements of notice and opportunity for a hearing. The new proceedings were to be conducted by an officer other than respondent No. 2 and were to be completed within three months. No order as to costs was made.