IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No. 7207 of 2009 ==================================================== M/s Bhagwati Bhandar, a Proprietary concern, having its place of business at Chhota Ramna, Supriya Cinema Road, Bettiah through its Proprietor, Sushil Kumar Keshan, son of Late Shree Ramautar Keshan, resident of Chhota Ramna, Supriya Cinema Road, P.S. Bettiah, District Bettiah, (West Champaran) ………………………………… Petitioner Versus 1. The State of Bihar through the Principal Secretary – cum – Commissioner of Commercial Taxes, Vikash Bhavan, Bailey Road, Patna, 2. The Principal Secretary – cum – Commissioner of Commercial Taxes, Vikash Bhavan, Bailey Road, Patna, 3. The Joint Commissioner of Commercial Taxes (Appeal), Tirhut Division, Muzaffarpur, 4. The Assistant Commissioner of Commercial Taxes, Bettiah Circle, Bettiah (West Champaran) …………………………… Respondents =================================================== APPEARANCE For the petitioners: Mr. S.D. Sanjay and Mr. Akash Chaturvedi, Advocates. For the respondents: Mr. Piyush Lal, JC to AAG-I. =================================================== 2 CORAM: HONOURABLE THE CHIEF JUSTICE And HONOURABLE MR. JUSTICE JYOTI SARAN ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) 12.01.2011. This petition filed under Article 226 of the Constitution arises from the order dated 02.05.2006 made by the Assistant Commissioner of Commercial Taxes, Bettiah under Section 32(1) of the Bihar Value Added Tax Act, 2005 (hereinafter referred to as `the 2005 Act’), confirmed in appeal by the Joint Commissioner of Commercial Taxes (Appeal), Tirhut Division, Muzaffarpur on 19.05.2006 and further confirmed by the Commissioner of Commercial Taxes, Bihar on 31.03.2009. Learned Advocate Mr S.D. Sanjay has appeared for the petitioner. He has submitted that the petitioner is engaged in wholesale business of food grains, oil, etc. On 06.03.2006 the Joint Commissioner of Commercial Taxes (Admn.) while inspecting the books of accounts of one M/s Sudhir Kumar Srivastava came across certain entries worth Rs. 44,58,325/- indicating payments made by the petitioner M/s Bhagwati Bhandar. On the basis of the said material, a notice was issued upon the petitioner under Section 56(2)(a) of the 2005 Act to produce its books of accounts. On production of the books of accounts by the petitioner, the only entry of payment made worth Rs. 6,00,000/- in favour of M/s Triveni Electro Mills was recorded. Rest of the payments allegedly made by the petitioner were not 3 recorded in his books of accounts. On the basis of the said material, namely, entries made in the books of accounts of M/s Sudhir Kumar Srivastava, the petitioner was alleged to have concealed purchase of oil worth around Rs. 44,00,000/- for which the value added tax was assessed at Rs. 1,69,760.36. Three times penalty was imposed and a total demand of Rs. 6,79,041.44 was raised against the petitioner. The said order was challenged by the petitioner before the Joint Commissioner of Commercial Taxes (Appeal), Tirhut Division, Muzaffarpur. According to the petitioner, the order made by the Assessing Officer was passed on presumptions without any evidence supporting his finding of concealment. The order made by the Assessing Officer was confirmed by the Appellate Officer. The challenge to the appellate order before the Commissioner of Commercial Taxes, Bihar also failed. Therefore, the present petition. Learned Advocate Mr. Sanjay has challenged the order of the Commissioner of Commercial Taxes. He has submitted that the orders made by the authorities below are based on presumptions and surmises. Unless there were independent evidence in favour of the finding that the petitioner had concealed certain purchases, the authorities below could not have recorded the finding of concealment against the petitioner nor could they have drawn an assessment order or imposed penalty over the petitioner. Learned Advocate Mr. Piyush Lal has appeared for the respondents authorities. He has, at the outset, 4 contested this petition on the ground of maintainability. He has submitted that against the order of the Joint Commissioner of Commercial Taxes, an appeal should lie before the Commercial Taxes Tribunal. In view of the alternative statutory remedy available to the petitioner, the present petition filed under Article 226 of the Constitution is not maintainable. He has next supported the orders of the authorities below. He has submitted that several entries were found in the books of accounts of the aforesaid M/s Sudhir Kumar Srivasatava indicating various payments made by the petitioner to the vendors outside the State. The petitioner was called upon to produce his books of accounts. On production of the books of accounts, out of several entries indicated in the name of the petitioner only one was recorded. The necessary inference, therefore, should be that the petitioner did not record rest of the purchases in his books of accounts and thus concealed the transactions with a view to avoiding payment of taxes under the 2005 Act. We are unable to agree with Mr. Lal. True, there were certain entries of payments allegedly made by the petitioner to certain vendors outside the State in the books of accounts of M/s Sudhir Kumar Srivastava. However, it was the duty of the Assessing Officer or the Inspecting Officer to examine the veracity of such entries. Unless such entries were verified and found to be true there could not have been an inference or presumption of the petitioner having concealed the alleged transactions. Though the petitioner did deny the alleged transactions the Assessing 5 Officer did not take trouble to verify the concerned entries, to find out independent material to prove that the petitioner had indeed concealed certain transactions with a view to avoiding payment of taxes under the 2005 Act. In absence of any independent material gathered by the Assessing Officer, the Assessing Officer could not have proceeded against the petitioner under Section 32(1) of the 2005 Act. The order of the Assessing Officer was made on the basis surmises and conjectures and not on the materials on record. The order was, thus, vitiated. The lower appellate authority and the revisional authority - the Joint Commissioner of Commercial Taxes and the Commissioner of Commercial Taxes, both have erred in confirming the order of the Assessing Officer and in absence of any independent material in fastening the liability upon the petitioner. In our opinion the authorities below have manifestly erred in holding the petitioner guilty of concealment and in making the impugned orders under Section 32(1) of the 2005 Act. In absence of any independent material connecting the petitioner with the alleged transactions we need not remand the matter to the Assessing Officer to consider the matter afresh. As we have held the impugned orders to be manifestly wrong, made on surmises and conjectures, in absence of any valid material the petitioner need not be relegated to avail of the alternative remedy of statutory appeal before the tribunal. For the aforesaid reasons, we allow this petition. 6 The impugned order dated 31.03.2009 passed by the Commissioner of Commercial Taxes, Bihar, the appellate order dated 19.05.2008 made by the Joint Commissioner of Commercial Taxes, Tirhut Division, Muzaffarpur and the assessment order dated 02.05.2006 made under Section 32(1) of the 2005 Act and the consequent demand notice are quashed and set aside. The writ petition is allowed with costs. Patna High Court. The 12th January 2011. NAFR. Dilip. ( R.M. Doshit, CJ ) ( Jyoti Saran, J )