AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 318
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....nt from taking steps pursuant to the impugned notice dated 19th June, 2015 under Section 59(2) of the DVAT Act and pursuant to the default assessment order of the same date. The Court further directed "Insofar as the order dated 13.01.2015, the petitioner is at liberty to seek appropriate remedies under the Act." Background Facts 3. The background facts are that the Petitioner, which is a registered dealer under the DVAT Act, filed statutory returns for all four quarters of financial year 2013-2014 in Form DVAT-16. Against the output tax liability arising from the sales made by it, the Petitioner claimed the benefit on input tax benefit in terms of Section 2(1)(r) read with Section 9 of the DVAT Act. According to the Petitioner, these transactions of sales matched with the corresponding purchase transactions as per the verification report of Annexures 2A and 2B for the aforementioned period as available on the website of the DT&T. 4. It is stated that on 26th March, 2014, the Petitioner was constrained to deposit Rs. 10 lakhs as advance tax for the period 1st January 2014 to 31st March 2015. On 13th August 2014, the enforcement team of the DT&T visited the Petitioner's....
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....ot found functioning." Subsequently the registration of CSI was cancelled by the concerned VATO and the returns of the said entity were also rejected. The VATO of the Petitioner was intimated by the VATO of Ward 101 by an order dated 25th August, 2014 that no goods had changed hands. 9. The order dated 13th January, 2015 proceeded to state: "On scrutiny of the purchases of M/s. Brilliant Metals P. Ltd. it found that 8 firms are also cancelled due to adverse report of the VATI of the concerned Ward VATI/E-1 VATI. All these firms found non-functional......These firms seem bogus as in spite of very high GTO they did not try for revival." Barring the mention of CSI the names of the other seven 'bogus' dealers were not mentioned. The order dated 13th January, 2015 stated: "the purchase from these dealers is rejected and ITC claimed is rejected for the year 2013-14." The purchases rejected worked out to Rs. 21,00,24,892 @ 5 per cent and Rs. 18,35,57,092/- @ 12.5 per cent with interest and penalty. The Petitioner was directed to pay an amount of Rs. 3,73,90,663/- and furnish details of such payment in Form DVAT-27A along with proof of payment on or before 14th March 2015. The t....
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....Tax Period Turnover Rate of tax under Dvat ITC Interest Total amount due (1) (2) (3) (4) (5) (6) (7) (8) 1 07680428741 OMEGA SALES CORPORATION Fourth Quarter-2013 1,00,20,084 5.00 5,01,004 87,298 5,88,302 Total 1,00,20,084 5,01,004 87,298 5,88,302 13. The Petitioner was directed to produce records regarding the above purchase in the office of the VATO on 26th June, 2015 and produce books of accounts and all evidence. The list of documents to be produced was also set out therein. 14. Strangely, without waiting for any reply, on the same date, i.e., 19th June, 2015, an order of notice of default assessment of tax and interest in Form DVAT-24 was issued by the VATO stating that no reply had been filed till then. The Petitioner was directed to pay a sum of Rs. 1,19,67,436/-. This was again an unsigned order. At the foot of the order was appended the endorsement: "This order has been framed on the basis of 2A & 2B data as on 10th June, 2015." On the same date, i.e., 19th June, 2015, the notice of assessment of penalty under Section ....
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....e dated 19th June 2015 was for the same period, i.e., fourth quarter of 2013 relating to purchases from OSC and the second quarter of 2013 insofar as purchases from JBN Impex were concerned. It is as a result of the above confusion that the Petitioner approached this Court with the present petition and on 24th July, 2015, the Court passed an interim order as noted hereinbefore. Response of the Department 18. In response to the writ petition, a short affidavit dated 22nd July, 2015 was filed by the DT&T. It was acknowledged that the Petitioner had filed online/revised returns for the period 1st April, 2013 to 31st March, 2014 comprising the four quarters. In this short affidavit, for the first time, a table was set out detailing the purchases made from "these eight bogus firms" for the period 1st April, 2013 to 31st March, 2014. Significantly, the names of the eight bogus firms (apart from CSI) and the details of the transactions involving them were not mentioned in the order dated 13th January, 2015, much less in the notice dated 26th August, 2014 issued under Section 59(2) of the DVAT Act. The eight bogus firms included JBN Impex, CSI and OSC, apart from Global Sales Agency ....
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....gnature of the VATO. 21. The position that emerges from the short affidavit filed by the respondent on 22nd July, 2015 is that the system generated notices and orders dated 19th June, 2015 uploaded by the DT&T were treated as withdrawn. However, according to DT&T, the impugned order dated 13th January, 2015 under Section 32 of the DVAT Act was to be read as pertaining to all the quarters of 2013 although the said order itself specifically states that it is only for the fourth quarter of 2013. CM 13505 of 2015 22. The Petitioner filed CM No.13505/2015 in which it was pointed out that on 15th June 2015, a nil demand was framed pertaining to the first quarter of 2013-2014. The Petitioner further pointed out that the system generated notices issued under Section 59(2) of the DVAT Act, which were uploaded on 19th June 2015, were made the subject matter of a batch of writ petitions in this Court including W.P.(C) No.6788/2015 titled M/s. Hello Furniture v. Commissioner, Trade & Taxes. In the circumstances, it was prayed in the application, i.e., CM No.13505/2015, that the Court should, inter alia, restrain Respondent from taking any coercive step to recover the disputed demand i....
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....ner wrote to the VATO, Ward 77, regarding issuance of C-Forms against purchases made during 2014-2015 and 2015-2016. The attention of the VATO was drawn to Rule 5(4) of the Central Sales Tax (Delhi) Rules, 2005 ('Delhi CST Rules'). The VATO was requested to give the necessary command at the website so as to enable the applicant to proceed with its application for downloading of the C-forms for the year 2014-15 and 2015-16, respectively. However, by order dated 8th December, 2015, the VATO declined to accede to the request since no stay was granted by the High Court of the order dated 13th January, 2015. This led to another application, being CM No. 2440 of 2016, being filed by the Petitioner praying for a direction to the VATO to issue C-Forms to the Petitioner and to set aside the order dated 8th December, 2015. 28. In CM No. 2440 of 2016, the Court passed the following order on 22nd January, 2016: "1. Notice. Mr Avtar Singh, Advocate for the Respondent accepts notice. 2. The prayer in this application is for setting aside an order dated 08th December, 2015 passed by the Value Added Tax Officer (VATO) declining the prayer of the petitioner for issuance of C fo....
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....6 and thereafter pass an order on or before 29th January 2016 on the Petitioner's request for issuance of C forms. A copy of the said order will be furnished to the Petitioner immediately thereafter. 8. This application is disposed of in the above terms." 29. Pursuant to the above order of this Court, an order was passed by the VATO on 29th January 2016, once again rejecting the request of the Petitioner for issuance of C-Forms. This was essentially on two grounds - (i) There was an outstanding demand of tax and penalty in terms of order dated 13th January, 2015 for which there was no order of stay from the competent authority and, therefore, the issuance of C-Forms could be refused under Rule 5 (4) of the Delhi CST Rules; and (ii) the Petitioner had not availed of the remedy of going before the AT under Section 76 of the DVAT Act against the order of the OHA dismissing the Petitioner's appeal and instead had filed a writ petition in this Court. 30. In the meanwhile on 5th November, 2015, yet another notice of default assessment was issued under Section 59 (2) on account of transactions entered into with third parties for the second and the fourth quarter of 2013....
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....th quarter, there was no mismatch of Annexures 2A and 2B as verified by the system and yet the DT&T was persisting with the order dated 13th January 2015 that these very purchases were bogus and suspicious. It was pointed out that neither in the notice of 26th August 2014 nor while framing the assessment was the Petitioner informed of the basis on which the transactions were termed as suspicious/bogus. 34. Mr. Jain submitted that the assessment framed on 13th January, 2015 was in violation of the principles of natural justice. The VATO while framing those assessments failed to advert to the reply filed by the Petitioner. Reliance was placed on Oryx Fisheries Pvt. Ltd. v. Union of India 2011 (266) ELT 422 (SC) and Paharpur Cooling Towers Ltd. v. Assistant Commissioner of Commercial Taxes (Audit) [2015] 86 VST 546 (Kar.). 35. Mr Jain further submitted that in the light of the orders passed on 15th June, 2015 in respect of the first quarter of 2015 and the admission by the DT&T in regard to the other quarters of 2013 that there was no mismatch, the order dated 13th January, 2015 has no legs to stand. According to him once the DT&T had framed an order of re-assessment on 19th Jun....
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....he order dated 13th January, 2015 was confined only to the fourth quarter of 2013. This has not been explained by the DT&T. 38. Secondly, the notice dated 26th August 2014, merely says that the VATO was examining the case of the Petitioner regarding "suspicious transactions (purchases) for the period 1st April, 2013 to 31st March, 2014". It calls upon the Petitioner to produce before the VATO on 1st September, 2014 its records, stock registers, bank records, etc. There is no mention in this notice of the names of the eight firms which were labelled as 'bogus/suspicious'. As far as the order dated 13th January, 2015 is concerned, the name of only one of the eight so-called bogus firms, i.e. CSI, finds mention. The names of the remaining seven firms were disclosed subsequently for the first time in the DT&T's short affidavit dated 22nd July, 2015. 39. It is a well-settled legal proposition that an order by a quasi judicial authority should set out, in the body of the order itself, the reasons therefor. In other words, the order should be self-explanatory. It should reflect the reasons that weighed with the decision maker. The reasons for an order cannot be supplied in a....
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.... the computerised system devised by the DT&T for issuing notices and framing orders of default assessments. This case is perhaps an apt illustration of the aphorism that if a computer is fed erroneous data it cannot possibly produce accurate results. As observed by this Court in Bhumika Enterprises (supra), a lot of confusion has been generated on account of the system generated notices being issued by the DT&T. The Court there noticed with concern that these were not "human generated" and were on the face of it clearly unsustainable in law. There the Court emphasised the need for a 'human interface' while making orders of assessment. 44. In the present case, the above narration of the facts portrays the avoidable confusion caused by the DT&T while issuing notices under Section 59(2) of the DVAT Act to the Petitioner on 19th June 2015 for various quarters of the same period, i.e., FY 2013-2014. This was followed by the DT&T having to withdraw those notices by issuing a subsequent order on 17th July, 2015 admitting to the inadvertent error committed by it. On 19th November, 2015 the DT&T issued yet another order retracting its notice dated 5th November, 2015, which again ....
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....om 'bogus/suspicious' dealers whose registrations have been cancelled. Where the registration of a dealer has been cancelled for whatever reason, the system cannot possibly verify the matching of Annexures 2A and 2B in respect of the transactions involving such dealer. The system will have to suitably programmed by the DT&T to remove such anomaly. 14. Added to this is the fact that in respect of the very same period for which the order dated 9th March 2015 was passed, i.e. for the third quarter of 2013, and in respect of the very same purchases transactions involving GSR and OSC, notices were again issued and order passed on 19th June, 2015 which was sought to be rectified on 17th July, 2015. It is, therefore, plain that needless confusion has been created by the DT&T by resorting to machine generated orders which were unsigned." 47. Mr. Avtar Singh relied on the decision in CIT v. Chhabil Dass Agarwal 2013 (10) SCALE 326 to urge that the High Court should not interfere in exercise of its writ jurisdiction if there is an adequate, efficacious, alternative remedy available to the Petitioner. 48. In the order dated 13th January, 2015 appears to suffer from seri....