Rajasthan High Court – Jodhpur
M/S. J.K. Lakshmi Cement Limited vs State Of Rajasthan … on 23 February, 2026
Author: Yogendra Kumar Purohit
Bench: Yogendra Kumar Purohit
[2026:RJ-JD:9734-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 6501/2020
M/s. J.k. Lakshmi Cement Limited, Registered Office At
Jaykaypuram , District Sirohi, Rajasthan, Through Its Authorized
Signatory And Power Of Attorney Holder Mr. Alok Kumar Son Of
Shri Arun Kumar Sing, Aged About 42 Years, Resident Of B-14/1,
Lal Bahadur Nagar, Jln Marg, Jaipur 302017.
----Petitioner
Versus
1. State Of Rajasthan, Through The Commissioner,
Commercial Tax Department, Kar Bhawan, Jaipur
Rajasthan.
2. Assistant Commissioner, Commercial Tax Department,
Anti Evasion, Pali, Rajasthan.
3. Assistant Commissioner, Commercial Tax Department,
Special Circle, Pali, Rajasthan.
4. Assistant Commercial Tax Officer, Commercial Tax
Department, Anti Evasion, Circle-I, Pali, Rajasthan.
----Respondents
Connected with bunch of petitions as per Appendix "A"
For Petitioner(s) : Mr. Ramit Mehta
Mr. Tarun Dudia
Mohd. Amaan
For Respondent(s) : Mr. Mahaveer Bishnoi, AAG
Mr. Anirudh Singh Shekhawat
HON'BLE MR. JUSTICE ARUN MONGA
HON’BLE MR. JUSTICE YOGENDRA KUMAR PUROHIT
Order
Reportable
Judgment Reserved on :- 15.01.2026
Pronounced on :- 23.02.2026
By the Court (Per, Arun Monga, J.):-
1. The above bunch of petitions is being disposed of by this
common order, as the facts therein are analogous and the
questions of law and issues involved are also common.
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2. Petitioner company has, inter alia, challenged the inspection/
survey report dated 18.02.2020 (Annexure A-8) issued by
respondent No. 4 i.e. Assistant Commercial Tax Officer and; the
consequential show cause notices dated 05.03.2020 and
06.06.2020 Annexure-9 (erroneously marked as Annexure- 8 in
the petition, instead of Annexure-9) and Annexure -10,
respectively issued by respondent No. 2 i.e. Assistant
Commissioner, Anti Evasion, Pali.
3. Case set up by the petitioner is that the said impugned notices
have been issued to the petitioner company for reopening the
assessment without any new material and incriminating evidences
for the purpose of doing reassessment under Section 25 of the Act
of 2003, on basis of misconception and change of opinion and by
adopting absolutely illegal and illogical stand. More of it later.
FACTS
4. For sake of convenience and brevity, relevant facts and
recitals are being taken from DB CWP No. 6501 of 2020 titled JK
Lakshmi Cement v. State and others.
4.1. That the petitioner company is into the manufacture and
processing of cement and clinkers and has got its own captive
limestone mines.
4.2. Its integrated cement manufacturing plants are set up at
Basantgarh, Rampura and Rohida and Basantgarhall in Dist.
Sirohi. Also, the petitioner company has got its grinding units at
Kalol, Surat and Jharli which use clinkers (an intermediate product
in cement production process) as raw material manufactured at
the petitioner company’s plant.
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4.3. The aforementioned limestone mines of the petitioner
company are essentially meant for captive consumption at their
respective locations wherein the crushing, grinding and
manufacturing units of the petitioner company are set up.
4.4. To facilitate execution of the work, the petitioner company
enters into arrangements with other outsourced agencies as per
agreed terms and conditions.
4.5. Under the said agreed terms, the ancillary and other
integrally connected work is executed by contractors/third parties.
Same involves extraction of the limestone, transportation of the
limestone to crushing, grinding and manufacturing platform of the
cement/clinkers and processing units of the petitioner company.
4.6. High Speed Diesel (HSD) is used in aforesaid activities,
which are integral to mining and manufacturing. In course of usual
requirements, HSD is provided by petitioner company to its
contractors and agencies.
4.7. That the petitioner company, as a matter of practice since its
inception has been procuring High Speed Diesel (hereinafter to be
referred as HSD) within the State of Rajasthan, from outside the
State of Rajasthan against C form, issued under the CST Act of
1956, at concessional tax rate.
4.8. However, on 05.09.2019, Commissioner, Commercial Tax
Department passed an office order requiring a survey to be carried
out qua usage and supply of HSD by petitioner company. Pursuant
thereto, a survey was conducted by the Respondent Department
(Anti Evasion Team) on 06.09.2019.
4.9. Vide impugned survey report dated 18.02.2020, the
authorities opined that the issuance High Speed Diesel (HSD) by
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the petitioner to its contractors and agencies is “sale” under the
Rajasthan VAT Act of 2003.
4.10. Basis thereof, a notice for appearance dated 11.03.2003 was
issued to the petitioner company to explain the aforesaid survey.
4.11. In continuation, further show cause notices dated
05.03.2020 and 06.06.2020 were issued under the provisions of
the CST Act 1956 and Rajasthan VAT Act 2003 by the Respondent
no.2.
4.12. Hence the writ petition challenging the said show cause
notices, as above.
5. We have heard learned counsel for the parties and with their
able assistance, have gone through the record. Arguments have
been addressed by both sides on the lines of their respective
pleadings.
SUBMISSIONS ON BEHALF OF THE PETITIONER
6. The petitioner challenges the impugned survey/investigation
report dated 18.02.2020 and the consequential show cause
notices dated 05.03.2020 and 06.06.2020 on the ground that they
are based on misconceptions, conjectures and surmises, issued
without jurisdiction, and in violation of principles of natural justice.
It is contended that the reopening of assessment is merely on a
change of opinion without any new or incriminating material and
therefore the impugned actions are arbitrary, illegal and liable to
be set aside.
6.1. The petitioner submits that the impugned notices, though
styled as show cause notices, are in substance orders as they
reflect a concluded determination by the department that the
petitioner is engaged in the sale of High Speed Diesel (HSD) to
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other entities and has received consideration for such
transactions. It is contended that the so-called inquiry proceedings
are merely a formality because the authorities have already
formed a final view on liability, rendering the petitioner’s
participation an empty and futile exercise. Accordingly, the notices
are challenged as effectively amounting to pre-decisional orders
rather than genuine opportunities to respond.
6.2. It is submitted that the respondent authorities have grossly
misconstrued the use of High Speed Diesel (HSD) in activities
integral to mining and manufacturing by wrongly treating its
issuance to contractors and agencies as “sale” under the Act of
2003. The petitioner asserts that there is no transfer of title, no
separate contract of sale, and no consideration received, as the
diesel is provided only to facilitate execution of work for the
petitioner. Consequently, the essential ingredients of a sale are
absent and the notices are founded on an erroneous
understanding of law and facts.
6.3. The petitioner further contends that under the statutory
definition of “sale,” a transfer of property in goods for
consideration is necessary, whereas in the present case diesel is
issued without any charge and is consumed in the integrated
process of mining, processing and manufacturing. The
department’s assumption that tariff differences or contractual
arrangements amount to recovery of diesel cost is stated to be
baseless, as payments are made to contractors for services and
not collected from them. The arrangements merely provide
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alternative mechanisms for reimbursement or supply of diesel for
operational convenience and do not constitute a sale transaction.
6.4. It is also argued that the authorities have wrongly presumed
that differences between “rate including diesel” and “rate
excluding diesel” represent diesel charges and have alleged cash
recovery without any evidence. The petitioner submits that
contractual terms allow for rate revision due to escalation of
inputs and that supply of ancillary materials to facilitate
performance of work cannot be equated with a contract of sale.
The diesel is used in execution of work and not transferred as a
commercial transaction.
6.5. The petitioner emphasizes that tax can be levied only on
completed sales and that diesel purchased is consumed in the
petitioner’s own operations as part of an integrated process. The
issuance of diesel to contractors is merely an internal arrangement
to execute work and cannot be treated as a taxable sale. It is
further submitted that statutory definitions must be applied as
they stand and that the department has misapplied the law.
6.6. Without prejudice, the petitioner states that even from the
impugned notices it is evident that diesel is used in activities
integral to mining and manufacturing and there is no material
indicating receipt of consideration. The entire exercise is alleged to
be an attempt to create a demand without factual foundation. The
petitioner also contends that the requirements under Section 25 of
the Act of 2003, including existence of “reasons to believe” based
on new material and granting of reasonable opportunity, have not
been satisfied. The reopening of assessment for FY 2015-16 is
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said to be illegal, particularly as reliance is placed on documents
of subsequent years.
6.7. It is further submitted that the petitioner merely transfers the
right to use diesel procured against C-forms without any element
of consideration and therefore no sale transaction arises. The
assessment for the relevant year had already been completed
after full disclosure and the department was fully aware of the
arrangements, making the reassessment a mere change of
opinion. The survey and investigation are described as a fishing
and roving inquiry conducted without proper basis.
6.8. The petitioner invokes the doctrines of legitimate expectation,
promissory estoppel and contemporanea expositio, stating that
the department had consistently accepted that supply of diesel for
operational purposes does not constitute sale. The notices are also
alleged to be violative of natural justice as they reflect a pre-
determined mind and fail to provide adequate opportunity of
hearing. It is contended that the notices lack material particulars,
including reasons for penalty, and ignore that diesel has been
accounted for as expense in the books.
6.9. The petitioner further submits that the use of HSD in
activities integrally connected with mining and manufacturing is
permissible under the CST framework and eligibility to procure
against C-forms is settled by judicial precedents. There is no
concealment or evasion, all transactions are recorded, and no
consideration has been received. Once assessment is completed, a
presumption of correctness arises which cannot be disturbed
without lawful basis.
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6.10. It is also argued that invocation of provisions relating to cess
under the Rajasthan State Road Development Fund Act is
erroneous as the petitioner is not engaged in sale of diesel. The
department’s actions are characterized as high-handed and
intended to create an unwarranted financial burden, particularly in
difficult economic circumstances, and therefore the impugned
report and notices deserve to be quashed.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS
7. The respondents submit that the present writ petition is not
maintainable and is liable to be dismissed as it has been filed
against notices dated 05.03.2020 and 06.06.2020, which merely
call upon the petitioner to furnish information, explanations and
documents for the purpose of inquiry under the CST Act, 1956 and
the RVAT Act, 2003. It is contended that no adverse order has
been passed against the petitioner and therefore there is no cause
of action. The authorities are acting within their jurisdiction and
the petitioner ought to have responded to the notices instead of
approaching the Court, rendering the petition premature.
7.1. It is further submitted that the petitioner is required to
participate in the proceedings before the competent authority and,
if aggrieved by any eventual order passed under the relevant
provisions, has an efficacious alternative remedy of appeal and
revision. The petitioner cannot pre-empt the decision-making
process or allege bias at this stage when the inquiry is ongoing.
The respondents assert that the petitioner will be afforded full
opportunity of hearing and its objections will be considered fairly
and objectively before any order is passed.
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7.2. The respondents state that the impugned notices were issued
for further inquiry based on documents received from the
investigating officer and that no prejudice has been caused to the
petitioner, who is free to produce evidence before the authorities.
It is also contended that the writ petition involves disputed
questions of fact which require examination of evidence and
therefore cannot be adjudicated in writ jurisdiction under Article
226, and the petitioner should pursue remedies before the
statutory authorities.
7.3. The respondents further submit that it would not be
appropriate to address the merits of the matter while the inquiry
is pending, as doing so may prejudice either party, and that the
proper course is for the petitioner to participate in the proceedings
where appropriate orders will be passed in accordance with law
after due hearing. Finally, it is contended that the writ petition is
merely an attempt to stall the inquiry and that allegations of bias
or prejudice are unfounded, as the authorities are bound to act
fairly and in accordance with law.
DISCUSSION AND ANALYSIS
8. Adverting first to the impugned inspection/survey report
dated 18.02.2020 (Annexure A-8), a plain reading thereof reveals
that the inspection/survey was undertaken by respondent No. 4 in
compliance with the directions contained in the order dated
05.09.2019 issued by the Commissioner, Commercial Tax
Department, Rajasthan, Jaipur.
8.1. By way of the said report, respondent No. 4 recorded, inter
alia, that the letter dated 15.04.2013 (Annexure-4), addressed by
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the General Manager to the Senior Vice President of the petitioner,
indicated that under the contract/agreement with M/s National
Transport Company for the same service/job, the contractor was
to be paid at a lower rate where diesel was supplied by the
petitioner and at a higher rate where diesel was not supplied and
had to be arranged by the contractor.
8.2. The aforesaid letter also contains a tabular statement
demonstrating that, for identical services/jobs, the rates payable
to the contractor with supply of diesel were lower than the rates
payable where diesel was not supplied. The said table/data is as
below :-
Sr. Job Quantity Existing Addition Diesel Diesel Difference Revised Rate without
Description rate al consumed consumption amount of rate diesel which is
including amount (Qty. in P/MT/Hr. diesel P/MT/Hr payable to the
diesel of 2% Ltr ) contractor
price @ given on
Rs. 1.4.11
26.83/30
1 2 3 4 5 6 7 8 9
1. Shifting/ 846327.800 15.90 269132 131087 0.155 3469873 20.32 12.06
handling of
screen reject
in mines
area
2. Shifting/ 601065.334 50.00 66165 198352 0.300 4621602 58.00 42.00
handling of
face reject in
mines area
3. Shifting off 2170548.93 50.00 217054 463831 0.213 10807262 56.00 44.50
line stone 0 9
from mines
to crusher-II
4. Supply of 21 74350.0 3127 27747 1321 734463 110811 40388
water tanker 0 (sic) (sic)
for water
spraying
within
mining area
on monthly
5. Internal 3306090.47 9.00 605896 233779 0.069 6187931(s 11.02 7.32
handling of 2 (sic) ic) (sic)
various raw
(sic)
material
required for
cement
production.
Payment on
cement
dispatch
quantity
6. Internal 1294385.46 6.25 0 62530 0.052 1787519 7.63 4.85
handling of (sic) (sic)
various raw
material
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required for
clinker
production.
Payment on
clinker
dispatch
quantity
7. Shifting & 70158.35 54.00 75771 07073 0.391 727210 65.45 44.58
feeding of (sic)
filter
8. Running of 2819.7 1792.00 — 51674 18 1204004 2219 1242
rock breaker
9. Internal 809912.057 33.00 0 191014 0.236 5056141 39.24 26.67
shifting of
material
without
Weighment
10 Internal 210496.4 35.00 0 60161 0.236 1592462 42.57 27.34
. Shifting of
Material
after
Weighment
11 Mixing of 29384 26.00 0 5697 0.194 150800 31.13 20.80
. TPP Fly Ash
with Coal
12 Clinker 469633.477 18.00 0 62674 0.133 1658981 21.53 14.42
. Loading in
Trucks
13 Dosing of 447837.45 18.00 0 62440 0.139 1652787 21.69 14.26
. Petcoke&
Coal in Coal
Gantry
14 Shifting of 380967.65 33.50 0 62620 0.164 1657551 37.85 29.09
. Clinker from
Shaft Silo to
Gantry,
Dozing &
Loading in
Rakes
15 Shifting of 67462.542 21.00 0 12546 0.186 332093 25.92 10.00
Clinker
within Plant
other than
Shaft Silo
without
Weighment
for loading
in rakes
16 Shifting of 3856.47 23.00 0 597 0.155 15803 27.10 18.85
Clinker
within Plant
other than
Shaft Silo
for Loading
in Rake after
Weighment
Dozing & 19442.97 32.00 0 3510 0.180 92910 36.78 27.16
Shifting of
Gypsum
received by
Rail
Feeding of 77584.68 19.00 0 13517 0.174 357795 23.61 14.33
Clinker, Fly
Ash etc. at
Feeding
Point
RUNNING OF EQUIPMENTS ON HOURLY BASIS
sr Name of Running
equipment hour
1. JCB 1760.50 700 12490 7.00 3306010 888 510
2. Loader 223.10 620 2289 10.00 53334 859 230
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3. Showel 1980.70 1000 32313 17.00 752893 1396 354
(sic)
4. Dozzer 133.20 2440 5329 40.00 124166 3372 920
5. Dumper 98.00 3000 2125 21.68 61986 3505 2350
(sic)
Total 1730794 43430223
8.3. It was thus, that on the basis of the tabular data/factual
particulars, ibid, relating to supply of diesel by the petitioner that
the respondent No. 4, in the inspection/survey report, proceeded
to propose/recommend initiation of appropriate proceedings by
the competent authority for determination and assessment of tax,
cess and penalty in accordance with the applicable Rules.
8.4. Pertinently, the aforesaid letter dated 15.04.2013 also bears
the signature of the contractor (M/s National Transport Company)
in token of acceptance, thereby evidencing concurrence with the
arrangement recorded therein.
9. The impugned inspection/survey report dated 18.02.2020
further records that M/s National Transport Company had also
raised invoices in respect of jobs for which diesel had not been
supplied by the petitioner. The report proceeds on the premise
that supply of diesel by the petitioner, being adjusted against part
payment of transportation charges, falls within the ambit of “sale”
as defined under Section 2(35) of the Rajasthan Value Added Tax
Act, 2003. It is further noted therein that, in terms of Section 4 of
the said Act, sale of diesel brought from outside the State of
Rajasthan would also attract liability to cess under Section 3 of the
Rajasthan State Road Development Fund Act, 2004.
10. Significantly, the Commissioner, Commercial Tax Department,
Rajasthan, Jaipur, at whose instance respondent No. 4 undertook
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the inspection/survey and submitted the report, has not been
impleaded as a party to the proceedings. Equally, the order dated
05.09.2019 directing conduct of the inspection/survey has not
been placed on record.
10.1. These omissions, supra, taken cumulatively, create a serious
procedural gap and render the record incomplete, thereby leaving
us also non plussed, apart from being an impediment to the
prayer seeking quashing of the impugned inspection/survey report
dated 18.02.2020.
11. In view of the foregoing facts and circumstances, we are
constrained to hold that no case is made out for interference for
quashing of the impugned inspection/survey report on the ground
of alleged illegality or otherwise, as urged on behalf of the
petitioner.
12. Moving on now to the impugned show cause notices.
Quashing thereof is sought primarily on the grounds, as canvassed
by the learned counsel for the petitioner, that :
(a) the impugned notices which are for the transactions of
financial year 2015-16 also contain references to subsequent
agreements dated 01.04.2017 and 27.03.2019;
(b) the assessment for the financial year stood already completed
and could not be re-opened;
(c) the petitioner had not concealed anything;
(d) the respondent department through out all these years since
inception of the company, was aware about the similar
arrangements between the petitioner and it’s contractors/service
providers;
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and
(e) respondent No. 2 has already decided in his mind and taken an
illegal unilateral decision holding that the petitioner is engaged in
the sale of HSD to work agency;
(f) having thus pre-decided the petitioner’s liability and
respondent No.2 is unwilling to consider the matter objectively.
13. Before we advert to the merits of the arguments, it is
pertinent to note that impugned Notice dated 05.03.2020,
Annexure P-9, required the petitioner to appear before respondent
No. 2 on 11.03.2020 to show cause why the amount of Rs.
11,35,90,985 on account of supply of diesel by the petitioner to
the contractor, during financial year 2015-16, be not treated as it’s
taxable turn over and as to why the tax, cess, interest and penalty
be not assessed accordingly. However, on petitioner’s request the
matter was adjourned.
13.1. Later, a fresh notice dated 06.06.2020, Annexure P-10, was
issued requiring the petitioner to appear before respondent No. 2
on 11.03.2020 qua the aforesaid proposed action. Thus, the
subject matter of both the notices i.e. one dated 05.03.2020
(Annexure P-9) and the other dated 06.06.2020 (Annexure P-10)
is the same.
14. For appreciation of the rival contentions in the proper
perspective qua legality of the impugned show cause notice dated
06.06.2020, Annexure P-10, (mainly in Hindi), translated version
thereof is reproduced hereunder for ready reference :
1. Name of the Dealer/Person: M/s J.K. Lakshmi Cement Limited
2. Registration No. (TIN) (if any): 08453300051
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3. Address of Principal Place of Business: J.K. Puram, Tehsil Pindwara,
District Sirohi
4. Email: [email protected]
Financial Year: 2015-16
5. (A) You are directed to submit:
With reference to the previously issued notice for appearance dated
11.03.2020.
In compliance with Order No. Addl.Commr./Pali/TA/Establishment/2019-
20/14 dated 24.02.2020 passed by the Additional Commissioner
(Administration), Commercial Taxes, Pali, the case file was received by
the undersigned from the Investigating/Prosecution Officer, Assistant
Commercial Taxes Officer, Anti-Evasion, Circle-I, Pali, along with
recommendation for initiation of proceedings under Sections 25(1), 55
and 61(1). As per the investigation report of the Prosecution Officer, the
main activity of the plant of M/s J.K. Lakshmi Cement Limited situated at
JK Puram, Pindwara, Sirohi is the manufacture of cement. According to
the investigation report, all mining activities and work related to Internal
Handling in respect of your plant have been carried out by M/s National
Transport Company, GSTIN 08ABAPB8891M1Z8, since 01.04.2018.
Prior to this, the said company was carrying out Raw Material
Shifting/Reject Material Shifting work and also partially mining work. At
present, all mining work related to your plant has been carried out by M/
s NTC Ventures Pvt. Ltd., GSTIN 08AAGCN6372B1ZI, since 01.09.2019.
After comprehensive examination of the documents obtained during
inspection/survey by the Prosecution Officer, copies of contracts, various
reports and correspondence, the following facts have emerged:
• M/s J.K. Lakshmi Cement Limited has, for all mining work
related to the plant at present, entered into a contract dated
27.08.2019 with M/s NTC Ventures Pvt. Ltd. (GSTIN
08AAGCN637281ZI). As per Clause No. 24 of the original
agreement dated 01.09.2008 referred to in the said contract,
“The Calculation of rate per ton is based on Diesel Prices
as on 28-08-2008. The Impact of change in diesel prices will
be reviewed quarterly and necessary amendment in rate will
be approved by Shri G.M. (Accounts).” Accordingly, a
provision was added for quarterly review of the prescribed
rates in accordance with changes in diesel prices. In this
sequence, in the letter dated 15.04.2013 written by the then
General Manager (Accounts) to the Senior Vice President
(Works), J.K. Lakshmi Cement, two different rates payable
by your company in respect of various contract-based works
executed by M/s National Transport Company, namely
‘rates inclusive of diesel’ and ‘rates exclusive of diesel’,
have been mentioned, which is confirmed from the sample(Uploaded on 25/02/2026 at 06:20:51 PM)
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Company in support of the various contract-based works.
• On perusal of Contract No. JKCL/Civil/2017/40577 dated
01.04.2017 and Contract No. JKCL/Civil/2019/40038 dated
27.03.2019, details are found regarding the supply of diesel
by M/s J.K. Lakshmi Cement for execution of the various
contract-based works mentioned in the said contracts.
• At the time of inspection, in the separate inquiry conducted
at the declared place of business of M/s National Transport
Company, from the Diesel and Requisition Slips and Diesel
Reports of Various Months obtained from the business
premises of the firm, evidence is also found that J.K.
Lakshmi Cement Ltd., J.K. Puram had supplied diesel for
the operation of various equipment of National Transport
Company.
• On analysis of the records relating to diesel usage for
various financial years submitted by M/s J.K. Lakshmi
Cement, it is also found that diesel was being supplied by
your company for the equipment of M/s National Transport
Company used in mining, plant machinery and internal
operations, which is also confirmed from the records of
diesel received by National Transport Company during
various financial years.
• On analysis of the letter dated 15.04.2013 of the Rate
Committee Meeting of M/s J.K. Lakshmi Cement Ltd., J.K.
Puram, it is also revealed that the rates for various
contract-based works executed by M/s National Transport
Company without diesel are lower than the rates for various
works executed with diesel, which again indicates that the
business firm M/s J.K. Lakshmi Cement Ltd., J.K. Puram, in
lieu of the differential amount between the diesel-inclusive
rate and the diesel-exclusive rate payable for various
contract-based works to M/s National Transport Company,
is supplying diesel instead of making cash payment of such
differential amount, which, upon comprehensive analysis
under Section 2(35) of the Rajasthan Value Added Tax Act,
2003 and the Indian Contract Act, 1872, is covered within
the definition of “sale.”
• Along with this, the business firm has, in various financial
years, supplied diesel to the contracted transport
companies for the transportation of clinker for the
manufacture of cement to different grinding units located
outside the State, such as Kalol, Jhajjar, Surat, etc. The
freight rates payable to the transport companies are
determined by the company management, and the amount
of freight to be paid in cash as well as the quantity of diesel
to be provided are also decided by the company
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management. This fact is also substantiated during the
survey by the examination of various transport companies
and by the documents and facts on record. Furthermore, in
lieu of partial cash payment of freight payable as
consideration for the transportation services received by
the business firm, providing diesel to the service provider is
covered under the definition of “sale” after a
comprehensive analysis of Section 2(35) of the Rajasthan
Value Added Tax Act, 2003 and the Indian Contract Act,
1872.
• In the course of the investigation proceedings, according to
the documents submitted by you, during the financial year
2015-16, the business firm supplied 860,924 liters of diesel
to M/s National Transport Company under Internal
Handling Work for equipment used in Internal Feeding
Work (Code No. 210110). Further, for equipment of M/s
National Transport Company used in Mining Work, a total
of 1,145,224 liters of diesel was supplied for the following
works: Water Spray Work (Code No. 210111); Material
Shifting Work (Code No. 210112); Face Material Shifting
Work (Code No. 210113); Lime Stone Shifting Mines to
Crusher (Code No. 210114); and Rock Breaker Work (Code
No. 210143). Additionally, for the work of transportation of
clinker to various grinding units of M/s JK Lakshmi Cement
Ltd., the business firm supplied 901,223 liters of diesel to
various transport companies.
• In the course of the aforesaid sale of diesel made by you
during the financial year 2015-16, as per the provisions of
Section 4 of the Rajasthan Value Added Tax Act, 2003, tax
liability is determined at the first point on the sale within the
State of diesel brought from outside the State, and liability
of cess is also determined under Section 3 of the Rajasthan
State Road Development Fund Act, 2004. Therefore, on this
escaped turnover of sales, it is required to assess the tax
payable under Section 25(1) of the Rajasthan Value Added
Tax Act, 2003 and the cess payable under Section 3 of the
Rajasthan State Road Development Fund Act, 2004, in
accordance with law. Further, on the unpaid tax,
consequential interest as calculated under Section 55 of the
Rajasthan Value Added Tax Act, 2003, and penalty under
Section 61 of the Rajasthan Value Added Tax Act, 2003, are
also payable as per the established legal position.
In the relevant financial year 2015-16, on the taxable turnover of sales
amounting to Rs. 113,590,985/-, tax amounting to Rs. 24,990,017/- at the
rate of 22% has been calculated. Under Section 3 of the Rajasthan State
Road Development Fund Act, 2004, on 2,907,371 liters of diesel
consumed during the relevant financial year 2015-16, cess amounting to
Rs. 5,087,899/- has been calculated at the rate of Rs. 1.75 per liter. It has
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also been recommended to levy interest under Section 55 and to impose
penalty under Section 61(1).
You are hereby directed to appear before the undersigned on the
scheduled date and explain why, on the basis of the recommendation of
the prosecuting officer, the taxable amount of Rs. 113,590,985/- should
not be treated as taxable turnover of sales and tax be levied under
Section 25(1), cess under Section 3 of the Rajasthan State Road
Development Fund Act, 2004, and interest under Section 55 along with
double penalty of tax under Section 61(1) be imposed in accordance with
law.
You are hereby summoned to appear in person before me on 12-06-2020
Assistant Commissioner, C.T.D., Anti-Evasion, Pali At 11.00 am Hours,
in the Office of undersigned and not to depart hence until permitted by
me.
Please take notice that failure to furnish the above required
information/documents or non appearance, without sufficient cause,
will render you liable to penalty under Section 64 of the Rajasthan VAT
Act, 2003.
Given under my hand and seal, this 06 Day of June., 2020
Sd/-
(Surendra Singh Rathore)
Assistant Copımissioner
Anti-evasion, Pali
15. Before proceeding further, Section 25(1) of the Rajasthan
Value Added Tax Act, 2003 be seen which is as under:
“25. Assessment in case of avoidance or evasion of tax.- (1)
Where the assessing authority or any officer authorized by the
Commissioner in this behalf has reason to believe that a dealer has
avoided or evaded tax or has not paid tax in accordance with law
or has availed input tax credit wrongly, he may after giving the
dealer a reasonable opportunity of being heard, determine at any
time and for any period, that taxable turn over of such dealer on
which tax has been avoided or evaded or has not been paid in
accordance with law or wrong input tax credit has been availed
and assess the tax to the best of his judgment.
xxx xxx xxx ”
16. At this stage, it is pertinent to note that under section 26(2)
of the 2003 Act, where the Commissioner has reason to believe
that a dealer has escaped assessment to tax in any manner
provided in sub-section (1), he may at any time, subject to the
time limit specified in sub-section (3), either direct the assessing
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the tax or the fee or other sum or himself proceed to assess the
same.
16.1. Vide section 91 of the 2003 Act, the Commissioner is
authorized to issue administrative instructions for carrying out the
purposes of the Act and to call upon any dealer to furnish
information, statement or return. Under Rule 60 of the Rajasthan
Value Added Tax Rules, 2006, the Commissioner, while exercising
his powers, may also take help from the subordinate officers
working under him.
17. There is no statutory provision laying down an absolute bar
against the re-opening of assessment already completed.
17.1. We are of the opinion that in absence of any bar, powers of
the assessing authority in terms of section 25(1) include the
power to re-open the assessment already completed, inter alia,
provided, if in his prima facie opinion, the dealer has not paid tax
in accordance with law.
17.2. This position would not be affected merely because, as
asserted herein by learned counsel for the petitioner, that nothing
had been concealed; the respondent department through out all
these years since inception of the company, was aware about the
similar arrangements between the petitioner and it’s
contractors/service providers.
18. Obviously, in present case, the exercise of inspection/survey
carried out by respondent 4 in compliance with the orders of the
Commissioner was a precursor to the process for initiating
proceedings for assessment of the tax which had earlier escaped
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assessment. On the basis of inspection/survey report, proceedings
for assessment of the tax were commenced by respondent No. 2
with the issuance of the impugned show cause notices to the
petitioner.
19. On merits also, as already noted by us in the preceding part
here in above, we do not find any reason for quashing the said
inspection/survey report. On it’s overall reading, we are of the
considered opinion that by no stretch of imagination, can it be
treated as a pre-decision of the respondent No. 4 to the effect that
the supply of diesel by the petitioner to the contractor amounted
to it’s sale and/or that, thereby, he had already determined the
demand for tax etc. Show cause notice is merely a sequel to the
survey report and in the normal cause of prudence right thing to
do before making up the mind qua any finality.
20. On the other hand, perusal of the survey report also shows
that respondent No.4 had tangible material before him and on it’s
basis, he had only expressed his own opinion/view that the case
required appropriate inquiry by the competent authority for
assessment of demand for tax, cess, penalty in accordance with
Rules. His recommendation/proposal, at the most, was an
expression of his opinion/view in the matter by respondent No.4.
He had only proposed/recommended the institution of an
appropriate inquiry for that purpose. This makes it abundantly
clear that respondent No. 4 had not taken any decision in the said
inspection/survey report to the effect the supply of diesel by the
petitioner to the contractor amounted to it’s sale to the latter and/
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or that thereby he had also assessed/determined the demand for
tax, cess, penalty.
21. True, as vehemently emphasized and pointed out by learned
counsel for the petitioner, the impugned notices which are for the
transactions of financial year 2015-16 also contain references to
subsequent agreements dated 01.04.2017 and 27.03.2019. In our
opinion, their reference by itself does not invalidate the impugned
notices, as there was/is other material before the competent
authority to sustain the notices.
22. As noted above, letter dated 15.04.2013, Annexure-4,
written by the General Manager to the Senior Vice President of
petitioner; revealed that the contract/agreement with M/s National
Transport Company for the same service job, the contractor would
be paid by the petitioner at lower rates if diesel was supplied by
the petitioner and; at a higher rate if diesel was not supplied by
the petitioner, but had to be arranged by the contractor. The
tabular chart in the said letter shows, inter alia, that for the same
services/jobs, the rates payable to contractor including the diesel
price are lower than the rates payable without diesel payable. The
letter purports to have been signed in token of acceptance on
behalf of the contractor (M/s National Transport Company). It
may, therefore, be taken an agreement between the petitioner
and the contractor. This document has been duly referred to and
relied upon by competent authority while issuing the impugned
notices. It is further mentioned in the inspection/survey report
dated 18.02.2020 that National Transport Company had also
raised bills in respect of the jobs, for which the petitioner had not
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supplied diesel. This materially relevant and tangible material
before respondent No. 2 would justify the issuance of the
impugned show-cause notice. Mere reference of the agreements
dated 01.04.2017 and 27.03.2019 (subsequent to the relevant
financial year 2015-16) in the impugned notices does not
invalidate them.
23. Referring to the contents of the show cause notice, learned
counsel for the petitioner’s contention is that the very language
therein per se reflects that respondent No.2 has already decided in
his mind and taken an illegal unilateral decision holding that the
petitioner is engaged in the sale of HSD to work agency; pre-
decided the petitioner’s liability and is unwilling to consider the
matter objectively.
23.1. Refuting these contentions, the learned counsel for the
respondents argued that at this stage the subject matter is under
a lawful inquiry by the competent authority, who has not yet taken
any decision in the matter. It is only for and during the course of
the inquiry that the impugned notices have been issued to the
petitioner calling for his explanation in order to complete the
inquiry and arrive at a decision and that no decision has yet been
taken in the matter. As asserted in the respondents’ preliminary
reply, the petitioner’s objections, if raised during the inquiry, shall
be considered by the respondent authority objectively, fairly and
in an unbiased manner without any prejudice against the
petitioner; he shall be afforded equitable opportunity of hearing
while considering his submissions, reply etc., objectively and
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without any prejudice in the matter and only thereafter the
respondent authorities shall pass any order in the matter.
24. On careful reading of the notice, we are inclined to agree to
the contention of the learned counsel for the respondents that at
this stage the subject matter is under a lawful inquiry by the
competent authority; that the competent authority has not yet
taken any decision in the matter; that it is only for and during the
course of the inquiry that the impugned notices have been issued
to the petitioner calling for his explanation, in order to complete
the inquiry and arrive at a decision and that no decision has yet
been taken in the matter by the competent authority. Petitioner
does not claim to have any super human powers to know the state
of mind of respondent No.2. Nothing on record has been brought
to our notice which would show that respondent No. 2 has already
decided in his mind and taken an illegal unilateral decision holding
that the petitioner is engaged in the sale of HSD to work agency;
has pre-decided the petitioner’s liability and is unwilling to
consider the matter objectively. The contentions to that effect
raised by the petitioner’s learned counsel are, therefore, rejected.
25. Moving on now to the next argument of the learned counsel
for petitioner that reassessment proceedings cannot be initiated
merely on the basis of change of opinion. In support of his
contention, he relies upon the judgments in CIT vs. Keelvinator
of India Ltd1 and M/s NawlaIspat Pvt. Ltd vs. Additional
Commissioner &Ors2 decided on 01.03.2019. We are unable to
accept this contention too.
1 (2010) 2 SCC 723
2 Writ Tax No. 1350/2018 (Allahabad High Court)
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25.1. In present case, the petitioner has not produced any
document showing that a clear/categorical decision had been
taken or opinion had been given/expressed or a view favouring
the petitioner had been taken by the competent authority in
respect of the same matter and that the impugned notices have
been issued merely on the basis of change of such earlier opinion.
We find no merit in the contention that the show-cause notice has
been issued merely on the basis of change of opinion. Reliance on
the judgments ibid is, therefore, misplaced.
26. Learned counsel for the petitioner also pointed out that the
interim order dated 02.03.2021 was passed by the learned Single
Judge dismissing the respondents’ applications under Article
226(3) of the Constitution of India for vacation of an interim order
dated 24.07.2020 also passed by a learned Single Judge, whereby
the effect and operation of the impugned notices dated
26.03.2020, 06.07.2020 and summon dated 27.12.2019 were
stayed. In the said order dated 02.03.2021, the court had held
that the respondents had failed to show that in the given
circumstances, the supply of diesel by the petitioner to the
contractor amounted to it’s sale.
26.1. Basis as above, learned counsel for the petitioner contended
that the respondents are barred by the principle of res-judicata
from again raising any such plea. Reliance for the contention is
placed on Single Bench of this court in M/s Ultratech Cement
Limited and another vs. The State of MP and others 3. In our
opinion, the contention is untenable.
3 WP No. 18026/2020 Rajasthan High Court decided on 12.08.2024
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26.2. Firstly, the respondents have not yet set up any specific
plea in the instant pleadings that the supply of diesel by the
petitioner to the contractor amounted to it’s sale. At this stage, it
is premature for the petitioner to set up the bar of res judicata
against a non-existent plea.
26.2.1. The broad stand taken by the respondents in the interim
reply/ preliminary objections is that no adverse order has yet been
passed whereby the petitioner can be said to be aggrieved; the
show cause notice has been to the petitioner in accordance with
law, only seeking certain information, explanation and documents
before taking any decision/passing any order. At the stage of filing
their interim reply/ preliminary objections, it was not appropriate
to enter into the arena of making submissions on the merits of the
issues as inquiry proceedings in the matter were pending
consideration before the respondent authorities and any
submission on merit might prejudice the case of the parties and
even otherwise would not be in the interest of the parties. It was
nowhere pleaded by the respondents in their interim reply/
preliminary objections whether or not the supply of diesel by the
petitioner to the contractor amounted to it’s sale to the contractor.
26.2.2. Secondly, perusal of the interim the order dated
02.03.2021 does not show if, at the time of it’s passing, the
respondents had even contended that the supply of diesel by the
petitioner to the contractor amounted to it’s sale to the contractor.
Further the order ibid shows that therein the learned Single Judge
did not record even an opinion, let alone hold or record any
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finding, that the supply of diesel by the petitioner to the contractor
did not amount to it’s sale.
26.2.3. In M/s Ultratech Cement Limited supra, at the time of
admission of the writ petition, a preliminary objection was raised
by the respondents with regard to alternative remedy which was
rejected. It was held that since the respondents did not challenge
the order rejecting their preliminary objection with regard to
alternative remedy, therefore, the principle of res-judicata would
apply and the respondents could not re-agitate the question of
alternative remedy in the same proceedings. There are no such
facts and circumstances in the instant case and the judgment ibid
has not applicability here.
26.2.4. The learned single Judge, while passing the order dated
02.03.2021, no doubt, recorded the court’s prima facie opinion
that the exercise undertaken by the respondents on the allegation
that the petitioner-company had sold diesel was not based on any
cogent evidence or material; that the respondents were
attempting to conduct a fishing and roving enquiry; that the
powers of reassessment or escaped assessment cannot be
exercised in the manner attempted by the respondents No. 2 to 4.
With due deference to the learned Single Judge, we express our
reservations about the aforesaid prima facie opinion recorded in
the case.
26.2.5. As noted above, in the impugned inspection/survey report
dated 18.02.2020 (Annexure A-8) and show cause notices, it is
mentioned, inter alia, that letter dated 15.04.2013 (Annexure -4)
written by the General Manager to the Senior Vice President of
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petitioner revealed that the contract/agreement with M/s National
Transport Company for the same service job, the contractor would
be paid by the petitioner at lower rates if diesel was supplied by
the petitioner and at a higher rate if diesel was not supplied by the
petitioner but had to be arranged by the contractor; this letter
contains a tabular chart showing, inter alia, that for the same
services/jobs, the rates payable to contractor including the diesel
price are lower than the rates payable without diesel; the
document also purports to have been signed in token of
acceptance on behalf of the contractor (M/s National Transport
Company).
26.2.6. It is further mentioned in the impugned inspection/survey
report and show cause notices that National Transport Company
had also raised bills in respect of the jobs, for which the petitioner
had not supplied diesel; that the supply of diesel by the petitioner
in lieu of the part payment of charges for transport of goods fell
within the definition of ‘sale’ under section 2(35) of the Rajasthan
Value Added Tax Act, 2003; under section 4 of the Act ibid, in case
of diesel brought from outside the State of Rajasthan, it’s sale in
this State (Rajasthan), would also attract liability for cess under
section 3 of the Rajasthan State Road Development Fund Act,
2004.
26.2.7. The order dated 02.03.2021 does not contain any
reference to the aforesaid facts/material available on record. It
appears that the same were not brought to the notice of the
learned Single Judge, when the said order was passed.
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26.2.8. In view of the aforesaid facts/material available on record,
we respectfully differ with the prima facie opinion expressed by
the learned Single Judge to the effect that the exercise
undertaken by the respondents on the allegation that the
petitioner-company had sold diesel was not based on any cogent
evidence or material; or that the respondents were attempting to
conduct a fishing and roving enquiry and that the powers of
reassessment or escaped assessment could not be exercised in
the manner attempted by the respondents No. 2 to 4. In our
opinion there is cogent and actionable evidence/material on record
justifying the submission of impugned inspection report by
respondent No. 4 and the issue of impugned show cause notices
by respondent No. 2.
27. In Radha Krishan Industries vs. State of Himachal
Pradesh4, the Apex Court observed (in para 27) that exceptions
to the rule of alternate remedy arise where:-
(a) the writ petition has been filed for the enforcement of a
fundamental right protected by part III of the Constitution;
(b) there has been a violation of the principles of natural justice;
(c) the order or proceedings are wholly without jurisdiction
or
(d) the vires of a legislation is challenged.
28. In this case, as of now, only the impugned show cause notice
has been issued requiring the petitioner submit his explanation
against the action proposed therein. If/when an order of
assessment is actually passed, the statutory remedy of appeal
4 (2021) 6-SCC 771
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against the same would be available to the petitioner. We are of
the opinion that it cannot be said in the instant case impugned
proceedings of the inspection/survey report and show cause
notices are wholly without jurisdiction. Vide section 82(1) read
with section 86 of the 2003 Act, appeal against the order of
Assistant Commissioner lies before the appellate authority
excepting a notice or summons issued under the Act for the
purpose of assessment or for any other purpose including the
recording of statements etc. We are also of the opinion that in the
event of an assessment order being passed against the petitioner,
an effective alternate remedy of appeal under the Act is available
to the petitioner and that the case does not fall within any of the
aforesaid any of the exceptions laid down by the Apex Court to the
rule against entertaining of writ petition by this Court.
CONCLUSION
29. In the light of above discussion/observations, we are of the
opinion that neither the impugned survey report dated 18.02.2020
nor the impugned show cause notices 05.03.2020 or 06.06.2020
are liable to be quashed.
29.1. Qua the impugned notices, in any case, an effective
alternate remedy was/is available to the petitioner to submit its
explanation with supporting material/documents, if any, against
the action proposed to enable respondent No. 2 to complete the
inquiry and take an appropriate decision. If aggrieved, by any
adverse order in case it is actually passed, petitioner can avail the
statutory remedy of appeal etc. under the 2003 Act or seek other
legally available remedy. Instead of that, on receiving the show
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cause notice, the petitioner straight away rushed to this court and
filed the instant writ petition challenging the show cause notice
without even submitting his reply to it, let alone completion of the
inquiry and taking of any decision in the matter by respondent
No.2.
30. We are of the view that aforesaid opportunity can be
provided by the respondent even now, as the petitioner should not
be penalized or deprived of justice merely because instead joining
the inquiry and presenting his explanation, he filed the instant
premature writ petition, obviously under some misunderstanding,
challenging the issue of show cause notices for the inquiry.
31. In the premise, ends of justice would be met if the petitioner
is relegated to the inquiry before respondent No. 2, to present his
explanation to the show cause notice with supporting
material/documents, if any, to enable the former to complete the
inquiry and take an appropriate decision. Respondent No. 2 should
communicate a fresh date and time to the petitioner for
appearance in the inquiry proceedings for hearing including the
presenting of his explanation to the show cause notice with
supporting material/documents, if any.
32. If aggrieved by the decision so taken by respondent No. 2,
the petitioner may avail the appropriate remedy under law. We
refrain from expressing any opinion on the aforesaid remaining
contentions raised before to avoid any prejudice to the parties.
RELIEF
33. Accordingly, the bunch of writ petitions is disposed of with
the following directions:
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(a) the petitioner is relegated to the inquiry before
respondent No.2, to present his explanation to the impugned
show cause notices with supporting material/documents, if
any, to enable the former to complete the inquiry and take
an appropriate decision;
(b) respondent No.2 should intimate a fresh date and time to
the petitioner for appearance in the inquiry proceedings for
hearing including the presenting of his explanation to the
show cause notice with supporting material/documents, if
any.
(c) if aggrieved by the decision so taken by respondent No.2,
the petitioner may avail the appropriate remedy under law.
(YOGENDRA KUMAR PUROHIT),J (ARUN MONGA),J
76-Devanshi/-
Appendix “A”
Sr. Writ Petition Case Details Relief claimed
No. Number
1. 5734/2020 M/S. J.K. CEMENT LTD. Quashing of Summon dated
Vs. 27.12.2019 issued by Respondent No.
STATE OF RAJASTHAN & ORS. 2, Notice dated 06.07.2020 issued by
Respondent No. 2 and Notice dated
06.07.2020 issued by Respondent No.
2.
2. 5699/2020 M/S J.K. CEMENT LTD. Quashing of Summon dated
Vs. 27.12.2019 issued by Respondent No.
STATE OF RAJASTHAN & ORS. 2, Notice dated 20.03.2020 issued by
Respondent No. 4, Notice dated
20.03.2020 issued by Respondent No.
4, Notice dated 06.07.2020 issued by
Respondent No. 2 and Notice dated
06.07.2020 issued by Respondent No.
2.
3. 5724/2020 M/S J.K. CEMENT LTD. Quashing of Summon dated
Vs. 27.12.2019 issued by Respondent No.
STATE OF RAJASTHAN & ORS. 2, Notice dated 06.07.2020 issued by
Respondent No. 2 and Notice dated
06.07.2020 issued by Respondent No.
2.
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4. 5725/2020 M/S J.K. CEMENT LTD. Quashing of Summon dated
Vs. 27.12.2019 issued by Respondent No.
STATE OF RAJASTHAN & ORS. 2, Notice dated 06.07.2020 issued by
Respondent No. 2 and Notice dated
06.07.2020 issued by Respondent No.
2.
5. 6596/2020 M/S J.K. CEMENT LTD. Quashing of Investigation/Survey
Vs. Report dated 18.02.2020 issued by
STATE OF RAJASTHAN & ORS. Respondent No. 4, Notice dated
05.03.2020 issued by Respondent No.
2 and Notice dated 06.06.2020 issued
by Respondent No. 2.
6. 6597/2020 M/S. J.K. LAKSHMI CEMENT Quashing of Investigation/Survey
LTD. Report dated 18.02.2020 issued by
Vs. Respondent No. 4, Notice dated
STATE OF RAJASTHAN & ORS. 05.03.2020 issued by Respondent No.
2 and Notice dated 06.06.2020 issued
by Respondent No. 2.
7. 6598/2020 M/S. J.K. LAKSHMI CEMENT Quashing of Investigation/Survey
LTD. Report dated 18.02.2020 issued by
Vs. Respondent No. 4, Notice dated
STATE OF RAJASHTAN & ORS. 05.03.2020 issued by Respondent No.
2 and Notice dated 06.06.2020 issued
by Respondent No. 2.
8. 6616/2020 M/S. J.K. LAKSHMI CEMENT Quashing of Investigation/Survey
LTD. Report dated 18.02.2020 issued by
Vs. Respondent No. 4, Notice dated
STATE OF RAJASHTAN & ORS. 05.03.2020 issued by Respondent No.
2 and Notice dated 06.06.2020 issued
by Respondent No. 2.
9. 6620/2020 M/S. J.K. LAKSHMI CEMENT Quashing of Investigation/Survey
LTD. Report dated 18.02.2020 issued by
Vs. Respondent No. 4, Notice dated
STATE OF RAJASTHAN & ORS. 05.03.2020 issued by Respondent No.
2 and Notice dated 06.06.2020 issued
by Respondent No. 2.
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