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DISTT LEVEL SCREENING COMITTI v VARDHMAN INDUSTRIES - STR Case No. 93 of 2005  RD-RJ 3720 (2 August 2007)
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR
S.B. Sales Tax Revision Petition No. 93/2005
District Level Screening Committee Kota & Ors.
M/s. Vardhman Industries, G-276, IPIA, Kota ::
Date of order :: August 24, 2007
HON'BLE DR. JUSTICE VINEET KOTHARI
Mr. Amit Ratnawat on behalf of Mr. R.B. Mathur for the petitioner-Revenue
BY THE COURT: 1. Heard learned counsel for the Revenue. 2. This revision petition is directed against the order of the
Tax Board dated 03.09.2004, whereby the Tax Board allowed the appeal of the assessee and held that the benefit under the
Incentive Scheme, 1987 could not be withdrawn with retrospective effect on the ground that the assessee had compounded in a case of alleged evasion of tax found against him and had paid the composition amount of Rs. 18,948/-. 3. The District Level Screening Committee (for short 'DLSC') had initially granted eligibility certificate under the aforesaid incentive scheme on 19.12.1995 on the basis of eligible investment made by the assessee unit in the State of Rajasthan to the extent of Rs. 683642/-. In a survey conducted on 10.01.2002, a case of evasion of tax was made out against the respondent assessee. The nature of avoidance or evasion of tax is not pointed out in the impugned order. The assessee compounded the said matter and paid the composition amount of Rs. 18,948/- fixed by the assessing authority. Thereafter, on the basis of the same material, the DLSC invoking Clause 9
(c) of the Incentive Scheme revoked the eligibility certificate granted to the respondent assessee with retrospective effect by its decision dated 27.09.2002. 4. The assessee appealed against the said decision of the
DLSC and the Tax Board by the impugned order dated 03.09.2004 allowed the appeal of the assessee and held that the benefit once granted to the assessee could not be withdrawn with retrospective effect. 5. Hence, this revision petition by Revenue. 6. I have heard learned counsel and perused the record. 7. The relevant clause 7(e) of the Incentive Scheme, 1987 in this regard as well as Clause 9(c) is reproduced hereunder for ready reference:- 7(e) An industrial unit covered by this
Scheme shall not be entitled to claim any benefits under it, if it has been panalised for avoidance or evasion of tax or any case of avoidance or evasion of tax is pending against it, at any forum of hearing.
Provided that where the offence of avoidance or evasion of tax is technical or venial in nature, the State Level Screening Committee in case of large scale units suo motu or otherwise and in case of medium or small scale units on the reference made by the
District Level Screening Committee or otherwise, may for reasons to be recorded in writing, waive the condition mentioned in sub-clause (e) above. 9(c) The Screening Committee shall be empowered to amend, suspend, restore or cancel the sanction for eligibility certificate accorded by it and copies of such orders shall be endorsed to the assessing authority. 8. The relevant Clause 7(e) of the Scheme merely stipulates that the industrial unit covered by this scheme shall not be entitled to claim any benefits under it if it has been penalised for avoidance or evasion of tax or any case of avoidance or evasion of tax is pending against it at any forum. The proviso gives power to the Screening Committee to waive such condition in appropriate cases. The proviso was inserted in
Clause 7(e) with effect from 04.03.1992. Obviously, if an avoidance or alleged evasion of tax is compounded by the assessee and determined composition amount is paid by him, neither the offence nor penalty survives. 9. The assessee under the provisions of the Act is free to compound such cases waiving his right to litigate in the matter and the assessing authority is also spared the labour of holding enquiry and passing the penalty orders. In such matter, it cannot be said that the assessee has been penalised for avoidance or evasion of tax. Therefore, neither of the conditions stipulated in Clause 7(e) of the Incentive Scheme can be said to be available if a case of alleged evasion of tax is compounded by the assessee and duly determined amount of composition is paid by him. Clause 9(c) of the Scheme merely permits the Screening Committee to amend, suspend, restore or cancel the sanction of eligibility certificate. The said Clause also does not specifically authorise the Screening Committee to revoke the eligibility certificate with retrospective effect. 10. It has been held in number of judgments that incentive benefit once granted to the assessee industrial unit after scrutiny of its application on satisfaction of the eligibility conditions, cannot be revoked with retrospective effect.
Reliance in this regard is placed on the following judgments:- 1. Commissioner, Commercial Taxes, Rajasthan & Anr. Vs.
Kandhari & Kandhari Pvt. Ltd. & Anr. reported in (1999) 113
STC 361 (RTT) 2. Kitchen Aid Vs. State of M.P. & Ors. reported in (1995) 110
STC 109 (M.P.) 3. CTO Vs. Prakash Udyog Oil Mill reported in (1997) 20 Tax
World 585 (RTT) 4. CST Vs. Elopic Paper Convertor reported in (1997) 104 STC
(Journal) 2 (S.C.), SLP dismissed 11. It would be a clear case of double jeopardy if an assessee who has already compounded a case of alleged evasion of tax, if he is further saddled with the consequence of deprivation of benefit of Incentive Scheme which is granted to him on the basis of eligible investment made by him in the
State of Rajasthan. The Revenue gets the composition amount with a further waiver of right of the assessee to litigate in the matter. Therefore, the Revenue cannot further invoke other adverse consequences for the assessee on the strength of some alleged case of evasion of tax. Such a consequence is neither permitted in law nor envisaged by the provisions of the
Incentive Scheme. Therefore, the Tax Board has rightly allowed the assessee's appeal and held that such benefit could not be revoked with retrospective effect on the said basis. 12. Consequently, this revision petition is found to the devoid of merit and the same is dismissed with no order as to costs. A copy of this order be sent to the respondent assessee.
Item No. 3
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