M/S Lokesh Singhal Trading PVT. LTD. vs. State Of Chhattisgarh

Held

The Court held that the petitioners failed to produce cogent and relevant documents to substantiate the genuineness of the transactions with M/s Hari Om Trading, both during the reassessment proceedings and in the present writ petition. The Court found no evidence of transportation documents, bills, or bank transaction details to support their claims. The absence of such documents led the Court to draw an adverse inference against the petitioners regarding the genuineness of the transactions. Furthermore, the Court noted from the provided table that petitioners were given numerous opportunities to appear before the authorities and establish their case, but they failed to do so. Consequently, the Court found no infirmity, irregularity, or arbitrariness in the orders passed by the respondent authorities, including the reassessment order dated October 7, 2016, and the subsequent affirmation by the Revisional Authority. The Court also found no jurisdictional error. Therefore, exercising its extraordinary powers under Article 226 of the Constitution, the Court was not inclined to interfere with the impugned orders, deeming them just, legal, and proper in the given factual matrix. The property attachment orders were not specifically discussed in detail but were implicitly upheld by the dismissal of the petition.

Facts

The petitioners, M/s Lokesh Singhal Trading Pvt. Ltd. and its directors, challenged orders passed by Chhattisgarh VAT authorities. The assessment period was April 1, 2012, to March 31, 2013. Proceedings were initiated under Section 22(1) of the Chhattisgarh VAT Act, 2005, for reassessment due to alleged bogus transactions with M/s Hari Om Trading, amounting to Rs. 16,85,53,139/-. The petitioners contended a violation of natural justice, claiming they were deprived of a reasonable opportunity to be heard and submit replies. The revenue argued that ample opportunities were provided, evidenced by multiple notices, but the petitioners failed to respond, leading to an ex-parte order dated October 7, 2016. This order was upheld by the Revisional Authority (order dated October 16, 2018) and a review petition was also rejected (order dated August 31, 2019). Property attachment orders dated June 13, 2018, and September 19, 2018, were also challenged.

Key Issues

1. Whether the petitioners were denied a reasonable opportunity of hearing and participation in the assessment proceedings, thereby violating the principles of natural justice, as contended by the petitioners under Section 22(1) of the Chhattisgarh VAT Act, 2005? 2. Whether the impugned orders dated October 7, 2016, October 16, 2018, and August 31, 2019, passed by the respondent authorities, are illegal, arbitrary, and in violation of the petitioners' fundamental and constitutional rights, particularly concerning the alleged bogus transactions with M/s Hari Om Trading? Petitioner's Arguments: The petitioners argued that they were deprived of their right to participate in the proceedings and were not given a reasonable opportunity of hearing before the impugned orders were passed. They claimed they could not submit specific details regarding M/s Hari Om Trading due to this lack of opportunity and that they acted bonafide, believing the firm existed. They sought an opportunity to explain their position before a fresh order is passed. Revenue's Arguments: The State Counsel contended that the petitioners were given ample opportunity of hearing, as evidenced by the notices issued and duly served. The failure to respond led to an ex-parte order. The revenue argued that the petitioners failed to produce cogent documents to substantiate the genuineness of the transactions with M/s Hari Om Trading, even in the writ petition, thus warranting an adverse inference. The revenue asserted that the impugned orders were neither malafide nor arbitrary and that there was no jurisdictional error.