M/S Oceanic Foods LTD. vs. State Of Gujarat

Held

The Court held that the impugned order passed under Section 34(8A) of the Gujarat Value Added Tax Act, 2003, was illegal and without jurisdiction. The Court found that the pre-condition for invoking Section 34(8A) is the pendency of proceedings under the Act. In this case, the assessment for the year 2011-12 had become final on March 30, 2015, and no proceedings under Section 35 or Section 75 of the Act were pending at the time the show cause notice was issued. The Court noted that the action was initiated more than seven years after the assessment period, based on an audit objection. Relying on the decision in *Dhanani Imp. Exp. Pvt. Ltd. Vs. State of Gujarat*, the Court reiterated that the pendency of proceedings is essential for exercising powers under Section 34(8A). Since this condition was not fulfilled, the Court concluded that the authority acted in excess of jurisdiction. Consequently, the impugned order dated November 28, 2019, was quashed and set aside. No issue was expressly left undecided.

Facts

The petitioner, M/s. Oceanic Foods Ltd., engaged in manufacturing dehydrated vegetables, had its assessment for the Assessment Year 2011-12 finalized on May 30, 2015, with a refund of Rs. 58,244/-. This assessment was completed without scrutiny proceedings under Sections 35 or 75 of the Gujarat Value Added Tax Act, 2003. More than seven years later, on September 17, 2019, the respondent No. 2 issued a notice for books of account for the period 2011-12. Subsequently, a show cause notice dated October 11, 2019, was issued under Section 34(8A) of the Act, alleging evasion of tax and claiming excess input tax credit. The petitioner's request for adjournment was denied, and an impugned order dated November 28, 2019, was passed, demanding Rs. 32,23,216/- including interest and penalty.

Key Issues

1. Whether the impugned order passed under Section 34(8A) of the Gujarat Value Added Tax Act, 2003, is illegal, without jurisdiction, unreasonable, and arbitrary, and therefore liable to be quashed and set aside? Petitioner's Arguments: The petitioner argued that Section 34(8A) could only be invoked when proceedings related to the subject matter of the show cause notice were pending. They contended that no such proceedings were pending, and the original assessment had attained finality. Therefore, reopening the assessment under Section 34(8A) was without jurisdiction. They relied on the Division Bench judgment in *Dhanani Imp. Exp. Pvt. Ltd. Vs. State of Gujarat* (SCA/9519 & 9520/2016), which held that the pendency of proceedings is a sine qua non for exercising power under Section 34(8A). Revenue's Arguments: The State contended that the respondent No. 2 rightly invoked Section 34(8A) because the Accountant General had raised objections regarding input tax credit for the year 2011-12, recommending appropriate action. In pursuance of this intimation, proceedings were initiated in accordance with the law.