The sales tax laws, currently operative in the State of Assam, are the Assam Value Added Tax Act, 2003 (VAT Act) and the Central Sales Tax Act, 1956 (CST Act). The former governs the sales and purchases of goods including the levy and realization of tax with other allied matters within the State of Assam, while the latter identically governs the sales and purchases of the goods made in the course of inter-State trade or commerce. Except some few provisions like registration, requirement of security, institution of case in the court of law, imposition of penalty, stock transfer and export of goods etc. all other provisions of the CST Act are governed by the VAT Act. A dealer, registered under the VAT Act and/or the CST Act, has to submit return in accordance with the provisions of said Acts in the prescribed manner after which, the taxing authorities of the State of Assam (the Assistant Commissioner of Taxes or the Superintendent of Taxes) takes up the proceedings for assessment of tax under the Acts, as detailed in the VAT Act. A dealer may at any time, require appearing before such taxing authority for the purpose of verification of the books of accounts with other documents and evidences. He may also require to appear accordingly for the hearing of the assessment proceedings and to produce the books of accounts, documents and evidences etc. pertaining to the return submitted by him for verification or examinations by the said taxing authority for the purpose of levy of tax with entertainment of the claims of sales made at the concessional rate of tax or for exemption of taxes, as the case may be. If the taxing authority finds any disparity, discrepancy or irregularity in the books of accounts and it has the reasons to suspect that there was evasion of taxes, the said authority may seize such books accounts etc. assigning specific reasons to be recorded in writing and grant such dealer a receipt, pertaining to such seizure. Such seized books of accounts can be retained in the custody of the seizing authority for so long as it may be necessary, but it can not be retained beyond one hundred twenty days without the approval of the Commissioner of Taxes, Assam. No books of accounts can be retained by the taxing authority merely by granting a receipt without making any formal seizure and this may be counted as illegal and unauthorized possession.
The VAT Act provided that all particulars contained in any statement, return furnished or accounts or documents, produced by a dealer in accordance with the said Act or in any record of evidence given in the course of any proceedings under the Act (other than the proceedings in the criminal court), or any proceedings relating to the recovery of demand, for the purpose of the VAT Act, are to be treated as confidential and notwithstanding anything contained in the Indian Evidence Act, 1872, no court saves, as aforesaid, is entitled to require any Government servant to produce record or any part thereof or give evidence before it in respect. The said Act, however, relaxed the restrictions and laid down that this can be made available for the following purposes:
(i)for the purpose of any prosecution under the Indian Penal Code, 1860 or the Prevention of Corruption Act or this Act or any other law for the time being in force; (ii) for furnishing any particulars to the Government or person in execution of the VAT Act; (iii) such disclosure may be occasioned by lawful employment under the said Act or of any notice or the recovery of any demand; (iv) for any such particulars to the Civil Court in any suit to which the Government, which relates to any matter arising out of the proceeding of the VAT Act; (v) any particulars to the officers, appointed by the Comptroller and Auditor General of India for the purpose of audit; (vi) to the authorities conducting the departmental proceedings against the taxing authorities; (vii) to the Central and the State Government authorities for the purpose of levy and realization of tax; (viii) to Bureau of Investigation (Economic Offence) and the Statistical authorities; (ix) to the Central Government for administration of any law in force in India and (x) for publication of any particulars of the dealers in the public interest. These restrictions and relaxations of the VAT Act as well will govern in the books of accounts, documents and evidences under the CST Act, as enunciated in the CST Act. The Act also provides in this context that if any employee of the Government discloses any of the particulars, referred to the above, he shall on conviction be punished with imprisonment, which may extend to six months or with fine or both. Such prosecution is however, to be instituted without the previous sanction of the Government.
When in course of verification or examination of the accounts, a taxing authority is primarily convinced that there is any evasion of taxes or any attempt thereof or any misuse of the declaration issued or any false or fabricated documents and declaration were produced by him or there is any other violation of the provisions of Acts is there, the taxing he may provide such dealer an opportunity to submit his written reply as well as of being heard, specifying the charges for institution of a case in the court of law or for imposition of penalty under the provisions of the Act. The offence may as well be compounded, if such dealer offers any prayer and subject to a mutual agreement, arrived between the two to a departmental compromise in this respect with quantum of composition money to be paid. This applies to the cases under the CST Act, which are governed by the VAT Act. There is, however, restriction in respect of the cases under the CST Act where restrictions are obviously there for imposition of penalty or compounding the offences. The institution of cases in the court of law is the ultimate course of action in such cases. In the case of institution of case under the VAT Act, previous sanction of the Commissioner is to be obtained, while previous sanction of the State Government is necessary in respect of the cases exclusively governed by the CST Act. However, before taking up any coercive measure, the assessment of tax is to be completed and the quantum of tax liabilities is to be ascertained. The contemplated penal measure is to be recorded in the said order in absence of which it may be construed that the latter action is product of after thought of the taxing authority.
A news item pertaining to the evasion of taxes amounting to about ten crore of rupees by two dealers of Guwahati was published in a section of dailies at the instance of the taxing authorities of Guwahati stating , inter-alia, that Ezahars were lodged before the Dispur Police Station in that respect. No good citizens will ever appreciate or encourage such tax dodging activities by any unscrupulous dealers and will always appreciate the coercive measures to be taken in this behalf in accordance with the provisions of the law enforced in this respect. The following pertinent questions have dragged us to utter confusion :-
(a) Whether the delinquent dealers were provided with any opportunity of being heard for the alleged foul play adopted by them before lodging ezahar, as in the quasi-judicial proceedings it it seems to be very much incumbent?
(b) Whether they were informed of their additional liabilities to pay the evaded tax to the extent of about ten crore of rupees by serving the demand notice after assessment, which is the normal custom of the taxation department?
( c) Whether there has been any amendment of the VAT Act as well as the Central Act relaxing the mandatory provisions that the returns, accounts, documents and evidences submitted by the dealers before the taxing authority have ceased to be confidential making the same access to the police officers by way of filing F.I.R. under the Indian Penal Code ignoring or superseding the restrictions under the VAT and the CST Act, if already there?
As an officer working in the tax department for long thirty two years and enjoying more than 18 years of post retirement period, we are very much confused for adoption of such a way of action. We hope, the benign Government will kindly be pleased to clarify for our future knowledge.
(Mrinal Kanti Chakrabartty)
R. G. Barua Road, Lakhimipath,Guwahati-781024