S.G. Gokani, J.

Rule. Learned AGP waives service of rule for the respondents.

1. This is a petition, preferred under Article 226 of the Constitution of India, challenging the legality and the validity of the assessment order dated 24.03.2020, passed in Form No. 304, as well as the Notice dated 24.03.2020, issued in the Form No. 305, by the respondent No. 2, under Section 35 of the Gujarat Value Added Tax Act, 2003 ('VAT Act', herein after).

1.1. The challenge is made essentially and predominantly on the grounds that, without assigning any reason or availing any opportunity and in complete breach of the principles of natural justice, the impugned order came to be passed by the respondent No. 2.

2. The petitioner is the sole proprietary concern, having its office at the address mentioned in the cause-title. It is engaged in the business of trading edible oil.

2.1. It is averred by the petitioner that, though, it has furnished periodical as well as annual self-assessment reports, as required under Sections 29 to 33 of the VAT Act and the petitioner was not selected for audit assessment, as provided under Sections 34(2)(b) of the VAT Act, and therefore, it is deemed that the self-assessment reports submitted by the petitioner have been accepted.

2.2. However, a notice came to be issued to the petitioner on 23.12.2019 for re-assessment under Section 35(1) of the VAT Act by the respondent No. 2. It is though lamented that no reason is given in the notice issued under Section 35(1) of the VAT Act for re-assessment.

2.3. A detailed reply was furnished by the petitioner on 13.03.2020, where, the Petitioner has sought various details as well as those documents on the basis of which the case of the petitioner is selected for re-assessment so that the Petitioner on the merits can aptly defend its case.

2.4. The grievance on the part of the petitioner is that respondent No. 2, ignored the communication dated 13.03.2020 and proceeded to pass the impugned order on dated 24th March, 2020, a day prior to the imposition of lockdown in the entire Country and thereby raising dues to the tune of Rs. 1,27,45,512/-, inclusive of the interest and penalty. The basis, for levying of the tax so also the penalty with interest, is the cancellation of registration of a vendor, with whom the petitioner had transacted during the years 2014 and 2015. It is averred by the petitioner that such cancellation of registration of the vendor concerned, i.e. M/s. Maa Oil Mills, Gondal, is done on 30.07.2019. M/s. Maa Oil Mills had the registration number 240942971. It is, therefore, urged by the petitioner that neither the copy of the cancellation of the registration of M/s. Maa Oil Mills nor any other materials nor any opportunity has been given to the petitioner to cross-examine a responsible employee or office bearer of the M/s. Maa Oil Mills and that is a complete failure on the part of respondent No. 2 to follow the principles of natural justice and the order came to be passed, denying the 'Input Tax Credit' (in short, 'ITC') to the petitioner.

3. We have heard the learned Sr. Advocate, Mr. Manish Bhatt, appearing for the petitioner with learned Advocates, Mr. Vijay Patel and Mr. Mehta, for the petitioner.

3.1. Learned Sr. Advocate, Mr. Bhatt, has argued before this Court that the law is well-settled, as to when the Court can exercise the jurisdiction under Article 226 of the Constitution of India, even when the alternative efficacious remedy is available. He, further, has urged that this is a one classic case, where, in complete violation of the principles of natural justice and in utter disregard of the law, well settled by this Court in various decisions, respondent No. 2 has acted and has imposed heavy liability of tax along with interest and penalty.

3.2. He, further, urged that, at no point of time, fraud is pleaded and all the transactions with M/s. Maa Oil Mills is through banking channels only. It is urged that there are transport receipts also on record, and therefore, the order of cancellation of registration of M/s. Maa Oil Mills will have no bearing, so far as the assessment of the present petitioner is concerned. Not only that, there are valid evidences of procuring of goods, after payment of GST, but, the same have also been sold, and therefore, there is violation of principles of natural justice, and therefore, writ-jurisdiction needs to be exercised by this Court.

3.3. As for the alternative efficacious remedy, he has urged that the law is well-settled. It is urged that even the communication dated 13.03.2020, which was addressed to respondent No. 2, has not been responded and the order impugned came to be passed on 24.03.2020, i.e. the day on which the nationwide lockdown was announced in wake of the outbreak of Covid-19 virus.

4. Learned AGP, Mr. Kathiriya, had appeared, on advance notice, for the respondent-authorities and has assisted this Court.

4.1. He has argued fervently that there is alternative, efficacious remedy available to the petitioner under the law. He, further, urged that Section 73 of the VAT Act provides for the appeal, and therefore, this petition should not be entertained. It is also urged that the cancellation of registration of the vendor- M/s. Maa Oil Mills is the reason for such order and since, such cancellation of registration is now being put on the official website of the respondent, it is for one and all to consume and act, accordingly.

4.2. It is also urged that, in the instant case, having noticed the bogus billing on the part of M/s. Maa Oil Mills, its registration has been cancelled, with effect from 21.07.2007. He drew the attention of this Court that M/s. Maa Oil Mills is the branch of M/s. Umang Oil Mills.

4.3. It is urged that the petitioner herein, also had dealings with M/s. Maa Oil Mills between the period from 01.04.2014 to 31.03.2015 and the Petitioner has not been given ITC for the said period, the petitioner cannot insist on giving it the input tax credit, since, the authority on inquiry found the bogus billing in the case of M/s. Maa Oil Mills.

4.4. He, further, has urged that so far as the period of reassessment is concerned, it got completed on 31st March, 2020, and therefore, that may also hamper the proceedings of re-assessment, if, the Court remits the matter back to the Assessing Officer.

5. In rejoinder, learned Sr. Advocate, Mr. Bhatt, has replied that these are the oral submissions made by the learned AGP, whereas, the impugned order does not speak of any bogus billing and in fact, it is only on account of cancellation of the registration of the M/s. Maa Oil Mills that the petitioner is not given the tax input credit. He, further, has urged that it is the case of respondent No. 2 that the order impugned in the present petition is due to the search in case of M/s. Maa Oil Mills, where, bogus billing was revealed. However, the said order was not supplied to the petitioner, though, requested for, and therefore, the same has to be construed as the clear breach of the principles of natural justice, which would entitle this Court to exercise the jurisdiction under Article 226 of the Constitution of India.

5.1. It is also contended by Learned Senior Advocate that the appeal, as provided under Section 73 of the VAT Act, can not be termed as an efficacious remedy, as the appellate authority will not have original powers of assessment or of further inquiry, as provided to the Appellate Authority under Sections 250 and 251 of Income Tax Act, 1962.

5.2. It is urged that the cross-examination of the owner or the designated officer of M/s. Maa Oil Mills also would be necessary, inasmuch as, all the dealings of the petitioner were through banking channels, as submitted before this Court, and therefore, to cull out the truth, this powers shall be needed to be exercised.

5.3. He, however, urged that the petitioner shall not raise the issue of limitation before the respondent-authority.

6. Having heard the learned Counsels on both the sides, we have chosen to hear and decide this matter in limini at the request of both the sides.

6.1. Noticing the provision of Section 73 of the VAT Act, which provides for appeal before the Assessing Officer against the impugned order, submissions of alternative remedy may look attractive on the face of it, however, it can be noticed that the appellate authority under the VAT Act does not have original powers of assessment or of further inquiry. Again, noticing the glaring and blatant act of denial of the very basic document of cancellation of the registration of M/s. Maa Oil Mills, being No. 240942971,which is the edifice for denying ITC to the petitioner, this court finds the request of invocation of Writ jurisdiction for the purpose of setting aside the impugned order necessary without entering into the merits, on the grounds of non supply of basic documents and non consideration of the case of the Petitioner independently, on its own merits. In absence of pleadings of fraud in the notice and with specific and categorical averment made in the reply to the notice of the transactions made through the banking channels, coupled with the procurement of goods for transportation, receipts for payment of GST and selling of the very goods to the other parties, make us believe that the order passed by respondent No. 2 is in breach of principles of natural justice. The individual merits on the basis of materials furnished are to be determined by the authority and not simply because the registration of M/S. Maa Oil Mills was cancelled ab initio. That being the case, we have chosen to entertain this writ-petition under Article 226 of the Constitution of India.

6.2. Here, apt would be to refer to the decision in 'VINOD ARVIND VS. INCOME TAX OFFICER', (2011) GLH 2255, where, this Court has held that the writ-jurisdiction is essentially a discretionary jurisdiction. A writ may not be issued, just because it may be lawful to so do it. Further, merely because an alternative, efficacious remedy is available statutorily that would not mean that the writ jurisdiction cannot be exercised. It is held that it is a self-imposed restriction and such restriction, however, may not apply, if, the alternative remedy is found to be illusory or burdensome, then, the Court may entertain the writ jurisdiction for breach of the principles of natural justice or for Protection of the fundamental rights or when the action of the authority is arbitrary or is lacking jurisdiction.

6.3. In the instant case, since, we find that there is violation of principles of natural justice, more particularly, when the petitioner chose to approach the respondent-authority on 13.03.2020 and requested for relevant and vital documents, in response to the notice issued by it, without supplying the same, respondent-authority has imposed the petitioner with not only the heavy penalty but also interest by the order dated 24.03.2020, which is impugned in this petition, we, therefore, deem it appropriate to entertain this petition and at the joint request made by both the sides, matter deserves to be remitted, quashing and setting aside the impugned order of assessment.

6.4. In our view, we are also supported by the decision of this Court (Coram: Mr. M.R. Shah, Mr. S.H. Vora, J.J.) (Coram: in the case of 'SHREE BHAIRAV METAL CROPORATION VS. STATE OF GUJARAT', Dated: 26.03.2015, rendered in Special Civil Application No. 2149 of 2015, wh, the petitioner had purchased the material from one M/s. Lucky Enterprise. The petitioner also had produced the bills, with regard to the goods purchased by it from M/s. Lucky Enterprise and the petitioner had claimed certain amount of total ITC on the purchase, allegedly made to have been from M/s. Lucky Enterprise. The Assessing Officer passed the assessment order, allowing ITC claim made by the petitioner in respect of the goods purchased from M/s. Lucky Enterprise. However, later on, the registration of the M/s. Lucky Enterprise came to be cancelled ab initio from 22.02.2006 on the ground that M/s. Lucky Enterprises is not a genuine dealer and had indulged into billing activities only, and therefore, all the transactions made by M/s. Lucky Enterprises were found to be bogus and non-genuine. Thereafter, the order passed by the Assessing Officer, allowing ITC claimed by the petitioner-dealer of Rs. 6,49,561/-, came to be taken under suo motu revision by the first Revisional Authority, i.e. Deputy Commissioner of Commercial Tax, Audit-1, Ahmedabad. Then, the petitioner dealer was served with the show-cause notice and was also called upon to show reason, as to why ITC claimed by the petitioner-assessee on the purchases alleged to have been made from M/s. Lucky Enterprises may not be denied or cancelled.

6.4.1. The petitioner, hence, appeared before the First Revisional Authority and produced the bills with respect to purchases made by it from M/s. Lucky Enterprises and reiterated and contended that the petitioner dealer had, in fact, purchased the goods from M/s. Lucky Enterprises, for which, the bills were submitted and on which theC was claimed. Then, by order dated 28.5.2013, the First Revisional Authority revised the order passed by the Assessing Officer, Dated: 30.12.2010 and raised the demand of Rs. 9,83,465/-, inclusive of tax, interest etc.. Further, while revising the assessment order, the First Revisional Authority disallowed ITC claimed by the petitioner of Rs. 6,49,561/-, on the purchases made from M/s. Lucky Enterprises, whose registration certificate was cancelled ab initio from 22.2.2006. While revising the order passed by the Assessing Officer and raising the aforesaid demand and denying ITC claimed, on the purchases made by the petitioner from M/s. Lucky Enterprises, the revisional authority had observed that as all the transactions by M/s. Lucky Enterprises including the transactions between M/s. Lucky Enterprises and the petitioner are found to be bogus and non-genuine and in the case of M/s. Lucky Enterprises, it has been found that the aforesaid M/s. Lucky Enterprises had not sold any goods to the petitioner dealer-assessee-M/s. Bhairav Metals, the petitioner-assessee-dealer is not entitled to ITC on the purchases alleged to have been made from M/s. Lucky Enterprises.

6.4.2. Feeling aggrieved and dissatisfied with the order passed by the First Revisional Authority - Deputy Commissioner of Commercial Tax, Audit-1, Ahmedabad, revising the order passed by the Assessing Officer dated 30.12.2010 and raising the demand of Rs. 9,83,465/- under the VAT Act and disallowing of ITC of Rs. 6,49,561/- on the purchases made from M/s. Lucky Enterprises, the petitioner-dealer preferred a further revision application before the Tribunal. The Tribunal, by relying upon its earlier decision in the case of one M/s. Madhav Steel Corporation, dismissed the said revision application, confirming the order passed by the first revisional authority, denying theC of Rs. 6,49,561/- on the purchases made by the petitioner from M/s. Lucky Enterprises, whose registration certificate came to be cancelled ab initio from 22.2.2006.

6.4.3. Being aggrieved with the order passed by the learned Tribunal, the petitioner approached this Court, where, after examining the material on record, this Court found that the petitioner was not given an opportunity, as is required under the law, before passing the impugned order by the Assessing Officer. The Court also held that the Tribunal did not properly appreciate the entire aspect and therefore, the judgment and order of the Tribunal came to be set aside and the matter was remanded to the authority concerned to reconsider the claim of the petitioner of ITC on the purchases made from M/s. Lucky Enterprises. The relevant observations of this Court, are profitably reproduced hereunder:

"9.2 From the order passed by the first revisional authority as well as from the impugned judgment and order passed by the learned Tribunal, it appears and it is not in dispute that the first revisional authority disallowed theC of Rs. 6,49,561/- claimed by the petitioner-dealer on the purchases alleged to have been made/purchased from M/s. Lucky Enterprises on the ground that the registration certificate in the case of M/s. Lucky Enterprises has been cancelled ab initio from 22.2.2006 and the transactions/purchases made by the petitioner from M/s. Lucky Enterprises are during the interregnum period. That while disallowing theC to the petitioner on the purchases from M/s. Lucky Enterprises, the first revisional authority has observed that the registration certificate in the case of M/s. Lucky Enterprises has been cancelled ab initio from 22.2.2006 by observing and holding that all the transactions by M/s. Lucky Enterprises are bogus and not genuine and that said M/s. Lucky Enterprises indulged in billing activities only and therefore, even the transactions between the petitioner and M/s. Lucky Enterprises are also bogus and non-genuine. To some extent, the first revisional authority can be said to be justified in drawing inference and/or in holding so and/or presuming so. However, the petitioner-dealer-purchaser was required to be served with the order in case of M/s. Lucky Enterprises cancelling its registration certificate ab initio and the findings recorded by the appropriate authority in case of M/s. Lucky Enterprises holding the transactions by M/s. Lucky Enterprises including the transaction with the petitioner-dealer as bogus and non-genuine and the finding recorded that M/s. Lucky Enterprises had indulged into the billing activities only. After giving an opportunity to the petitioner-dealer-purchaser and confronting it with the findings recorded by the appropriate authority cancelling the registration certificate ab initio in case of seller - M/s. Lucky Enterprises, the claim of the purchaser like the petitioner-dealer of theC on the purchases made from such seller, whose registration certificate has been cancelled ab initio on the ground that such seller had indulged into billing activities only, is required to be considered. However, an opportunity is required to be given to such dealer/purchaser to prove the genuineness of the transaction and/or to justify its claim of ITC. In the present case, the first revisional authority had disallowed theC claimed of Rs. 6,49,561/- on the purchases alleged to have been made from M/s. Lucky Enterprises relying upon the order passed by the appropriate authority in the case of M/s. Lucky Enterprises cancelling its registration certificate ab initio from 22.2.2006 and the finding recorded by appropriate authority while cancelling the registration certificate of M/s. Lucky Enterprises ab initio from 22.2.2006 that the transactions by M/s. Lucky Enterprises are bogus and non-genuine. However, the petitioner dealer was not served with the copy of the order in the case of M/s. Lucky Enterprises cancelling its registration certificate ab initio from 22.2.2006.

9.3 Now, so far as contention of the petitioner that the petitioner produced necessary documentary evidence such as bills, vouchers, weigh bills/slips and the payments were made by cheques and therefore, the first revisional authority ought not have disallowed theC is concerned, as such, it cannot be accepted. As held by Division Bench of this Court in case of Madhav Steel Corporation (supra) in which the Division Bench of this Court had also considered the decision in case of Giriraj Sales Corporation (supra), that while claiming ITC on the purchases made by a dealer, a dealer is also required to prove and establish the actual movement of goods and is required to prove the genuineness of the transaction and then and then only, theC can be allowed. Therefore, along with such documents like bills, vouchers, weigh bills/slips etc., a dealer is also required to prove and establish the actual movement of goods from the place of the seller to the place of the purchaser by leading cogent evidence and mere production of the bills, vouchers etc. is not sufficient to claim theC.

9.4 As observed earlier, the impugned order has been passed by the adjudicating authority denying theC claimed by the petitioner on the alleged purchases made by the petitioner from M/s. Lucky Enterprises on the ground that the registration certificate of M/s. Lucky Enterprises on the ground that the registration certificate of M/s. Lucky Enterprises-seller has been cancelled ab initio on the ground that the seller had involved into the billing activities only and all the transactions by M/s. Lucky Enterprises are held to be bogus. The petitioner has been denied theC on the ground of the aforesaid activities/alleged transactions between the petitioner and M/s. Lucky Enterprises. However, as observed herein above, the petitioner was not served with the copy of the order in the case of M/s. Lucky Enterprises. Now, the copy of the order passed in the case of M/s. Lucky Enterprises is available with the petitioner. Therefore, after giving an opportunity to the petitioner with respect to observations made in the case of M/s. Lucky Enterprises insofar as the alleged transactions between the petitioner and M/s. Lucky Enterprises and after giving an opportunity to the petitioner to prove the genuineness of the transaction between the petitioner and M/s. Lucky Enterprises in light of the observations made herein above, therefore, the matter is required to be remanded to the adjudicating authority to consider the claim of the petitioner for ITC on the alleged purchases made by the petitioner from M/s. Lucky Enterprises.

9.5 While passing the impugned order, the learned Tribunal has not properly appreciated and consider the aforesaid aspect. Under the circumstances, the impugned judgment and order passed by the learned Tribunal is required to be quashed and set aside on the aforesaid ground alone and the matter is required to be remanded to the adjudicating authority to consider the claim of the petitioner of ITC on the alleged purchases made by the petitioner from M/s. Lucky Enterprises.

10. In light of the observations made herein above and for the reasons stated above, the petition succeeds in part. The orders passed by the authorities below impugned in the present petition are hereby quashed and set aside and the matter is remitted to the file of the adjudicating authority to consider the claim of the petitioner for ITC claimed on the alleged purchases made by the petitioner from M/s. Lucky Enterprises after giving an opportunity to the petitioner afresh in accordance with law and on merits in light of the observations made herein above. However, it is made clear that there is no question of now allowing and/or permitting the petitioner to lead fresh evidence as it will tantamount to afterthought. The aforesaid exercise shall be completed within a period of three months from the date of receipt of the present order. It is made clear that the impugned orders are set aside solely on the ground that they were found to be in breach of principles of natural justice, inasmuch as the petitioner-dealer was not served with the copy of the order in the case of M/s. Lucky Enterprises, the basis of which theC has been denied. It is also made clear that this Court has not expressed anything on merits in favour of the petitioner-dealer with respect to genuineness of the transactions alleged to be between the petitioner and M/s. Lucky Enterprises. Rule is made absolute to the aforesaid extent. In the facts and circumstances, there shall be no order as to costs."

6.5. In the matter on hand, we notice that the petitioner has already produced, before respondent No. 2, substantiating documents, indicating the actual movement of the goods for proving genuineness of the transaction as also the documents, pertaining to the transport of goods, transport receipts, bills, vouchers etc. under the circumstances, non-providing of the material, more particularly, of the cancellation of registration of M/s. Maa Oil Mills ab initio from the year 2007 and holding the entire transaction bogus, shall need to be the act in breach of the principle of natural justice and therefore, we deem it appropriate to remand the matter for adjudication to the competent authority, for it to consider the claim of the petitioner of ITC on the purchases made by the Petitioner from M/s. Maa Oil Mills.

6.6. We are conscious of the fact that the period prescribed for reassessment of five years has already been concluded on 31.03.2020. However, since, the petitioner has moved this Court questioning the action of the respondent authority and as it has submitted through the learned Sr. Advocate representing its case that no contention, with regard to period of limitation shall be raised, the same shall not be treated as a ground to hamper the proceedings before the tax authority for its fresh consideration of the show-cause notice issued to the present petitioner. It would be of utmost necessary for the adjudicating authority to independently examine the material, which has been/ shall be placed on record before it by the petitioner and assess the same, on the strength of the substantiating documents, rather than basing its decision, solely on the cancellation of the registration of M/s. Maa Oil Mills, ab initio from the year 2007.

7. Resultantly, this petition succeeds and is PARTLY ALLOWED. The impugned order dated 24.03.2020 is QUASHED and set aside and the matter is REMANDED to the competent authority for its consideration afresh, on merits, the case of the petitioner of ITC, after availing due opportunity to the petitioner, herein.

7.1. We have NOT entered into the merits of the matter and only on the ground of breach of principles of natural justice, we have chosen to remit the matter back to the concerned authority. None of the findings or observations made herein above shall benefit either side nor prejudice the case of the litigants.

7.2. The respondent-authority shall SUPPLY the material requested for by the petitioner, including the order of cancellation of registration of M/s. Maa Oil Mills and any other materials connected therewith and available with it, for the purpose of re-assessment.

7.3. If, any fresh evidence is needed to be furnished by the petitioner, let the same be done within the period of two weeks from the date of receipt of the documents requested by the petitioner from the respondent-authorities.

7.4. On the basis of the material adduced by the petitioner, the genuineness of the transaction made by the Petitioner with M/s. Maa Oil Mills shall be examined by the authority concerned independently and on the strength of its own merits, without being influenced by any of the findings or observations made in this Petition or in any other proceedings.

7.5. Needless to say that the petitioner shall cooperate in the proceedings of reassessment before the competent authority and as ensured, shall not raise the plea of limitation.

7.6. Let this entire exercise be completed, if possible, within the period of SIX MONTHS, from the date of receipt of a copy of this order.

Rule is made absolute, accordingly. Direct service through E-MODE is permitted.