Assessment under MVAT can continue where revenue has material suggesting accommodation entries and taxable business activity.

Where the revenue already has material giving reason to believe that taxable business may have been carried on through accommodation entries, assessment may proceed under Section 23(4) of the Maharashtra Value Added Tax Act, 2002. The Court noted that the statutory definitions of business and dealer are broad, and that the petitioners' own bank-account transactions, together with income-tax material indicating suppressed turnover, provided sufficient basis for inquiry. Pending applications for summoning witnesses or obtaining records did not suspend the authority's jurisdiction, and the assessee could still contest dealer status and invoice genuineness in the assessment proceedings.

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Issues: Whether the petitioners had made out a case to restrain the sales tax authorities from proceeding with assessment under Section 23(4) of the Maharashtra Value Added Tax Act, 2002 until their pending applications for summoning bank officials, calling third-party witnesses and obtaining records were decided.

Analysis: The petitioners claimed that they were not dealers and that the transactions reflected only accommodation entries, with no actual sale or purchase of goods. The Court noted that the statutory scheme under the Maharashtra Value Added Tax Act, 2002 defines business and dealer broadly, and that Section 23(4) permits assessment where the authority has reason to believe that a dealer liable to pay tax has failed to do so or has failed to register. On the facts, the petitioners themselves admitted opening and operating bank accounts through which cheques were deposited and cash withdrawn, while not disclosing the persons at whose instance the accounts were used. The Court also relied on the material already available with the revenue, including the income-tax assessment record indicating suppressed turnover and accommodation entries, to hold that the department had sufficient basis to proceed. It further held that the petitioners had not shown that the pending applications deprived the authority of jurisdiction to continue the inquiry, and that their defences on genuineness of invoices and dealer status remained open in the assessment proceedings.

Conclusion: The petitioners were not entitled to stall the assessment proceedings, and the revenue authorities were permitted to continue and complete the assessment.

Final Conclusion: The writ petition failed, and the challenge to the assessment notice and the continuing inquiry was rejected; the authorities were directed to complete the pending proceedings expeditiously.

Ratio Decidendi: Where the revenue already has material giving reason to believe that a person may be carrying on taxable business through accommodation entries, the assessment authority may proceed under Section 23(4) of the Maharashtra Value Added Tax Act, 2002, and the assessee cannot insist on prior disposal of every collateral application as a precondition to assessment.

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