TaxTMI 
TaxTMI 
2008 (8) TMI 804
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....I was convinced that apart from the issue regarding the validity of the provisions of the Act, the question touching upon the jurisdiction of the authority to act under section 26 of the Act genuinely arises for consideration in this writ petition. The petitioner claims to be a housewife, having no business interests whatsoever. The petitioner's husband late Anirudhan was a Government contractor. He expired on November 5, 2000. Later Anirudhan and the petitioner's son Biju Anirudhan had jointly conducted business under the name and style of M/s. Vasan Enterprises. Apparently, this business was stopped on May 30, 1995. Biju Anirudhan thereafter commenced business under the name and style of M/s. Anjaneya Motors, as a proprietary concern for the distribution of opel cars. The said concern also dealt with the spare parts of cars. M/s. Anjaneya Enterprises is registered under the KGST Act as also under the VAT Act. On February 21, 2008 the petitioner received summons from the Assistant Commissioner, second respondent, to appear before him on March, 11 2008. Several questions dealing with the business of Biju Anirudhan, the petitioner's son, was put to her. The petitio....
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.... 2003 555394 Rs. 3,00,000 May 7, 2003 555395 Rs. 70,000 May 9, 2003 555396 Rs. 60,000 Smt. Vasantha Anirudhan is therefore liable to be assessed under section 19C of the KGST Act 1963." Exhibits P-10 and P-11 are the replies given by the petitioner to exhibits P-4 to P-9 notices. The replies are dated May 24, 2008. The relevant portion of the replies reads as follows: "You have stated in the notices that on enquiry by you it is found that I have made investment in the business of M/s. Anjaneya Motors, stood surety for the loan raised by Sri Biju Anirudhan and shared profit from the business showing that five cheques for a total amount of Rs. 5,80,000 during the period from July 17, 2002 till May 9, 2003 have been received by me. Please note that M/s. Anjaneya Motors is a proprietary concern solely owned by Sri Biju Anirudhan. According to my information he has obtained sales tax registration in his own name and conducted the business by he himself. I have absolutely no connection with his business or any other business. I am only a housewife. I have pledged my properties with the Union Bank of India for the loan taken only on an additional collateral security. I have given....
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....e VAT Act, I dare say, seems to be mounted on nebulous grounds. Since what is challenged is a provision in a plenary statute, the grounds available in this regard would be limited to the following: (a) Violation of the constitutional provisions. (b) Legislative competence. (c) Repugnancy vis-a-vis the provisions of any Central statute, within the meaning of article 254 of the Constitution of India. There is no challenge to section 26 of the VAT Act on the ground that it is repugnant to the provisions of any Central statute as such, occupying the same field. The challenge seems to be rested on the ground that the provision is violative of articles 14 and 19 of the Constitution, to the extent to which the provision enables the competent authority to rope in the guarantor of an assessee also by way of a protective assessment under section 26 of the VAT Act. This, it is contended, is violative of articles 14 and 19. In an ambiguous way, it is also contended that since it is violative of articles 14 and 19 of the Constitution, it should also be treated as beyond the legislative competence of the State Legislature. I think, it is better to deal with the contention as p....
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....the principal, and therefore, the Legislature has acted beyond its competence in roping in the guarantor within the ambit of section 26 of the VAT Act. I am not impressed with this argument. With due respect to the learned counsel for the petitioner, the fallacy in the argument is rested on the assumption that the power under section 26 of the VAT Act is exercised in such a manner as to rope in a person, who is associated with the business of the assessee, on the strength of or by reason of such association being relatable to the jural relationships mentioned in the provision. That is to say, the argument proceeds on the premise that agent, employee, manager or power of attorney holder of the assessee could be roped in on the strength of section 26 of the VAT Act, merely by reason of such jural relationship with the assessee. But this is not what section 26 of the VAT Act contemplates. The jurisdictional factor which enables the assessing authority to proceed under section 26 of the VAT Act is that there should be reason to believe that any person is or was carrying on business in the name or in association with any other person. It is the actual association with the busi....
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....al factors which are otherwise provided for are satisfied. In my view, the challenge mounted by the petitioner to section 26 of the VAT Act on the ground that the Legislature has no competence to rope in a guarantor also within the ambit of section 26 of the VAT Act will, therefore, have to be held as misconceived and misplaced. Further the challenge to the constitutionality or validity of a provision in a plenary statute carries with it in its wake an extremely onerous burden on the part of the person who mounts the challenge. The provision contained in the plenary statute reflects the will of the people and it could be interfered with only on extremely limited grounds. The law, on this point, has been referred to in extenso by the Supreme Court in Government of Andhra Pradesh v. P. Lakshmidevi [2008] AIR 2008 SC 1640; AIR [2008] SCW 1826. The following passage from the judgment of the Constitution Bench of the Supreme Court, in R.K. Garg v. Union of India [1981] 4 SCC 675, referred to in Lakshmidevi [2008] AIR 2008 SC 1640; AIR [2008] SCW 1826 with respect, deserves reproduction: "Another rule of equal importance is that laws relating to economic activities should be viewed....
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....one it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in the Secretary of Agriculture v. Central Reig Refining Company 94 Law Ed. 381, be converted into Tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any Legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities and inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the Legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic appr....
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....he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income-tax Officer would be without jurisdiction. The important words under section 147(a) are 'has reason to believe' and these words are stronger than the words 'is satisfied'. The belief entertained by the Income-tax Officer must not be arbitrary or irrational. It must be reasonable or, in other words, it must be based on reasons which are relevant and material. The court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income-tax Officer in coming to the belief, but the court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147(a). If there is no rational and intelligible nexus between the reasons and t....