The High Court of Andhra Pradesh recently dismissed a tax revision case that sought the opportunity of cross examination of the Tax department officials on F-Forms submitted by Dealer.
The petitioner-M/s. Foods, Fats and Fertilizers Limited is a registered company on the rolls of the Commercial Tax Officer, Tadepalligudem and dealer in vegetable oil, deoiled cake etc.
During the year 1991-92 the petitioner sent consignment of vegetable oils to outside the State and sales through non resident agents. The assessing authority-Commercial Tax Officer ( CTO ) granted an exemption on a turnover of Rs.1,64,15,660/-.
The Deputy Commissioner (Commercial Tax), in his revised Order has brought a turnover of Rs.1,52,12,755/- to tax as inter-state sales. The assessee/petitioner filed Tribunal Appeal No.192 of 1997, which has been dismissed by the Appellate Tribunal by Order dated 31.12.2001.
The Deputy Commissioner (CT) in its Order has clearly observed that the Commercial Tax Officer examined the books of accounts of the dealers and a show cause notice dated 19.01.1993 was issued allowing exemption on the turnover of Rs.1,66,70,771/- in addition to other exemption relying on sale patties and F-forms filed by the dealer. The Commercial Tax Officer subsequently issued another show cause notice dated 03.07.1993 proposing withdrawal of exemptions on turnover of Rs.1,52,06,954/-
In view of the verification of transactions and enquiries conducted by the Commercial Tax Officer, Tadepalligudem with the assistance of the Sales Tax officials at Bombay, which revealed that 5 agents were non-existent fictitious and the F-forms issued by those agents to the petitioner-dealer were not issued by the Sales Tax officials at Bombay and were not certified F-forms by the concerned Sales Tax officials at Bombay and consequently, the sale patties and other relevant records filed by the petitioner-dealer in support of the consignment
sale could not be accepted as correct and valid.
The enquiries also revealed that the agents had not paid any sales tax in their State to the concerned Sales Tax officials on the sale in respect of book transactions.
The question “Whether the report of the Commercial Tax Department at Bombay could be relied upon without affording an opportunity to the petitioner to cross-examine the Officers of Commercial Tax Department of the reports at Bombay?” was framed to be answered in the present revision case.
The bench noted that,
(i) the tax proceedings are of quasi-judicial nature. The Tax Authorities are bound to comply with the principles of natural justice though they are not strictly bound by the rules of evidence;
(ii) The rule which requires an opportunity to be heard to be given to the person likely to be affected by a decision is, however, not an inflexible rule having a fixed connotation. It has a variable content depending on the nature of the inquiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the rights affected and the consequences flowing from the decision;
(iii) The right of cross-examination is undoubtedly a facet of natural justice and where the circumstances clearly justify such a course, it cannot be denied; To put it differently, in a given case the rule of audi alteram partem may import a requirement that witnesses whose
statements are sought to be relied upon by the authority holding the enquiry, should be permitted to be cross examined by the party affected while in some other case it may not;
(iv) The Taxing Authorities can even base their conclusion on their private opinion or assessment or reports called without the need formally to introduce them in evidence, but (a) the same must be fully disclosed to the assessee, and (b) he is given an opportunity to rebut the same;
(v) The position in law is to this effect that the Tax Officer though not debarred from relying on any material against the assessee, but justice and fair play demand that the source of information relied upon by the Tax Officer must be disclosed to the assesse so that he may be in a position to rebut the same and an opportunity should be given to the assessee to meet the effect of the said information.
(vi) If the statutory provision provides for right of cross examination or such a right directly or even by necessary implication flows from opportunity of hearing, depending upon the nature of enquiry, the nature and character of the rights effected and consequences flowing from the decision, the right of cross examination cannot be denied.”
It was noted that, “The enquiry report is based on record, F-forms were not issued by the Tax Department to the petitioner’s 5 alleged agents and those were doing business in goods other than those claimed by the petitioner assessee. Some of the agents were not available at the addresses given. To disprove those facts of the report it was not necessary to afford opportunity of cross examination of the Officers of the Tax Department at Bombay. Those facts if not correct, could have been controverted by the petitioner by filing material to evidence that those agents were at the addresses given and they were dealing in goods not other than those claimed by the petitioner as also that F-forms were issued to those agents by the Tax Department at Bombay.”
It was observed that, “We are of the considered view that in passing the impugned orders there is no violation of the principles of natural justice. It could not be argued as to what prejudice has been caused to the petitioner for want of opportunity of cross examination.”
It was thus held for the question of law framed that the procedure followed is just, fair and in consonance with the principles of natural justice. No opportunity of cross examination to the petitioner was required to be given. It has not resulted in violation of the principles of natural justice so as to interfere with the order under challenge.
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