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2016 (5) TMI 886
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....d to buy goods from local registered dealers on payment of Value Added Tax (in short 'VAT') and effect further sales inside the State and claimed Input Tax Credit (in short 'ITC') in its returns and adjusted the same while paying output tax. 2.2. While so, the place of business of the petitioner was inspected by the Enforcement Wing Officials of the Commercial Taxes Department on 04.06.2014 and the inspecting officials alleged that there would be reversal of ITC for the assessment years 2012-2013 and 2013-2014 for the reason that the sellers have not reported their sales to the petitioner and have also not produced the documents as per Section 19(13) of the TNVAT Act. Further, huge quantum of suppression of transactions were unearthed, claiming bill trading transactions. 2.3. The petitioner objected to the allegations of the inspecting officials and refused to sign in the statement, dated 25.8.2014 prepared by them and therefore, it was sent by post to the petitioner, who filed their objections. 2.4. However, according to the petitioner, without conducting an enquiry as contemplated under Section 27 of the TNVAT Act, the respondent had straight away issued ....
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....nt records. 2.9. However, the petitioner filed objections, dated 14.09.2015 along with the books of accounts as required by the respondent in the notice, dated 01.09.2015. 2.10. Claiming that the respondent without providing the details sought for by the petitioner and without giving them any opportunity to prove their case, has passed the impugned orders, the petitioner has come forward with the above writ petitions. 3. Heard Mr.P.Rajkumar, learned Counsel appearing for the petitioner and Mr.S.Monaharan Sundaram, learned Additional Government Pleader appearing for the respondent. 4. The learned Counsel for the petitioner has contended that the respondent is wrong in passing the impugned orders without verifying the books of accounts of the petitioner and also without conducting an enquiry as contemplated under Section 27(2) of the TNVAT Act. 5. Further, he contended that without providing the details and documents requested by the petitioner in their objections, dated 12.05.2015 and 22.06.2015 and also in the written submissions, dated 14.09.2015, the respondent ought not to have passed the impugned orders. 6. He also submitted that without conducting an enquiry ....
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....ditional Govt. Pleader has contended that since the assessment orders have been passed in terms of the provisions of the TNVAT Act, 2006 and following the principles laid down by the Apex Court as well as this Court, the petitioner should have exhausted the appeal remedy without coming forward with this writ petition, which is not maintainable, as there is no question of law involved or principles of natural justice is violated. 13. I have carefully considered the afore said submissions made on either side and perused the impugned orders of the respondent. 14. Since the fate of these writ petition lies on the fate of the impugned orders, dated 30.11.2015 and 15.12.2015, it is imminent for this Court to decide the legality of the same. 15. A careful perusal of the impugned orders reveals the following defects: a. Invoice Mis-match b. Purchases effected from Registration Certificate cancelled Dealers c. Cross Verification revealed huge evasion of tax. d. Purchase Omission e. Bill trading, without payment of tax. 16. In respect of Defect No.1, the respondent has found that the dealers have effected purchases from the dealers who....
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....dings of the retrospective cancellation of the registration, which they failed to do. But the registration cancelled dealers were not in existence and merely issued bills and invoices without any actual transaction of goods and issuing bills and invoices. Further, the respondent concluded that the contention of the dealers that they have furnished the original invoices as per Section 19(1) of the Act and eligible to avail the ITC as per Section 19(10)(a) and Rule 10(2) of the Act and Rules, is not acceptable and it is for the dealers to prove the burden of proof for the claim of ITC under Section 17(2) of the TNVAT Act, 2006. Further, the ITC availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to be incorrect, incomplete or otherwise not in order, as per Section 19(16) of the Act. In these circumstances, the ITC availed by the dealers is reversed as per Section 27(2) of the Act. 21. Similarly, the respondent has dealt with Defect No.2 and come to the conclusion that the contentions of the dealers are not acceptable for the reason that the ITC availed by the dealer is only provisional and the assessi....
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....ods to buyer for a price. There may be a contract of sale between one part owner and another." 24. Thus, the transfer of property in goods is essential and sine-qua-non for any contract of sale which is absent in this case. Further, it is stated that mere sale invoices alone are not enough to prove transaction of goods from the dealer to the customers, but other evidence for payment and transport documents are quite necessary that the dealer had really transacted the goods to his customer's place, with reference to which, he has to claim ITC by producing the purchase bills depicting sufferance of tax at earlier stage. 25. It is seen that the petitioner i.e., purchaser has failed to furnish the evidences of actual transaction of goods in respect of the transactions, they entered into. Accordingly, the provisions of Section 19(15) of the TNVAT Act have been invoked in reversing the illegal claim of ITC. 26. With regard to Defect No.3, the respondent arrived at the conclusion that the burden of proving the genuineness of transaction lies on the petitioner as per Section 17(2) of the TNVAT Act, 2006. Since, the petitioner's vendors have issued only bills and invo....
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.... procuring the bills from the cancelled dealers/bill traders/stopped business dealers by claiming and adjusting the huge amount of ITC of Rs. 5,90,74,095/- (Rupees Five Crores Ninety Lakhs Seventy Four Thousand and Ninety Five only). Therefore, according to the respondent, the entire claim of ITC is incorrect and ineligible and thus, to be reversed under Section 27(2) of the TNVAT Act, 2006. 30. Thus, it is very clear that the dealers have paid tax of Rs. 55,402/- (Rupees Fifty Five thousand and four hundred and two only) for the entire sales turnover of Rs. 109,24,15,035 (Rupees One Hundred Nine Crores, Twenty Four Lakhs Fifteen thousand and Thirty Five only) and adjusting ITC of Rs. 5.91 Crores for the year 2012-13 and the dealers have evaded payment of output tax in this State by procuring local bills from Bill Traders/Cancelled Dealers/Stopped Business dealers and availed/adjusted the ITC against their local sales effected for Rs. 109.24 Crores. 31. Therefore, the entire ITC of Rs. 5,90,74,095/- (Rupees Five Crores Ninety Lakhs Seventy Four thousand and Ninety Five only) has been reversed under Section 27(2) of the TNVAT Act, 2006. 32. In respect of Defect No.4, the re....
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....etitioner were realized by one Raja, who is nothing to do with the three dealers. By recording the above findings, the revenue established that the bills produced by the petitioner are bogus. The decision of this Court in the case of GOVINDAN & CO. VS. STATE OF TAMIL NADU (1975) 35 STC 50, which has been subsequently confirmed by the Supreme Court in STATE OF TAMIL NADU VS. RAMAN & CO. reported in (1994) 93 STC 1994 is also to the same effect. In the absence of any materials placed by the petitioner to prove the contrary either before the authorities or even before this Court, there is no scope for interference by this Court." (ii) The State of Tamil Nadu rep. by The Deputy Commissioner (CT), Chennai (North) Division v. Tvl. Gupta Iron and Steel Company [Tax Case (Revision) Nos.1361 and 1362 of 2006, decided on 19.01.2012], wherein the Division Bench of this Court has held thus: "6. .....The assessing authority also factually found that the registration certificates of the dealers in question were cancelled much prior to the purchases effected. Hence, the assessing authority re-determined the total and taxable turnover of the assessee on the ground that no material evid....
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....o were not in existence and that their registrations have been cancelled and as there was no transaction of goods, the respondent has passed the impugned order in a detailed manner, after affording an opportunity of being heard to the petitioner. 36. In these circumstances, it is the duty of the petitioner to substantiate their claim by producing their books of accounts and to prove that the dealers from whom purchases were made were in existence and the goods were moved from the place of purchase to the place of the petitioner. Since the petitioner has miserably failed to prove the same, the respondent has passed the impugned order. 37. However, the learned Counsel for the petitioner has placed reliance upon the judgments of this Court, cited supra, to contend that the retrospective cancellation of the dealers would not affect the purchases made from such dealers by the petitioner and that the bills issued by them cannot be held to be bogus bills, however, in the considered opinion of this Court, those decisions would not lend any support to the case of the petitioner. 38. In this connection, it would be more relevant to reproduce the conclusion of the respondent in respe....
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....petitioner have already been furnished in the notices, dated 20.2.2015 and if any details to be required by the petitioner, the same will be provided and requested the petitioner to appear for a personal hearing on 10.6.2015. On receipt of the notice, dated 15.5.2015, the petitioner through a letter, dated 9.6.2015 sought for an extension of time to appear for personal hearing. The petitioner thereafter send a written submission, dated 22.6.2015 through its Assistant Manager to the respondent. Since the respondent had refused to receive the same, it was sent through the registered post on 23.6.2015 to the respondent." 43. Whereas the respondent, in the impugned order, has stated as under: "The objections raised by the dealer in their letter, dated 12.5.2015 have been considered carefully with regard to the contentions raised in the notice, dated 20.2.2015. The dealers have requested for personal hearing in their objections dated 12.5.2015, hence, the dealers were requested to appear in person on 10.6.2015 at 11.30 a.m., along with books of accounts and other connected papers vide this office notice dated 15.5.2015 for check of accounts and also furnishing of th....
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.... order under challenge is wholly without jurisdiction or the vires of the statute is under challenge. 46. As already stated, in the case on hand, there is no violation of principles of natural justice. It is not the case of the petitioner that the order under challenge is wholly without jurisdiction or the vires of the statute, is under challenge and therefore, viewed from any angle, the present writ petitions cannot be maintained. 47. In this regard, it would be more pertinent to refer to the decisions of the apex Court to have clarity on the point that under what circumstances, a writ petition can be entertained, especially, when the alternative efficacious remedy is available. 48. In Union of India and others vs. Major General Shri Kant Sharma and another reported in (2015) 6 Supreme Court 773, while speaking on behalf of the Division Bench of the Apex Court, the Hon'ble Mr.Justice Sudhansu Jyoti Mukhopadhaya, after referring to the following decisions, has observed as under: "28. In Kanaiyalal Lalchand and Sachdev and others vs. State of Maharasthra and others, (2011) 2 SCC 782, this Court considered the question of maintainability of the writ petition whi....
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....led of. This rule was stated with great clarity by Willes,J. in Wolverhampton New Waterworks Co. v. Hawkesford in the following passage: (ER p. 495) "There are three classes of cases in which a liability may be established founded upon a statute. But there is a third class viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to. The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd. and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd. and Secy. Of State v. Mask and Co. It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine. 14. In Mafatlal Industries L....
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.... Court set aside the order passed in a tax matter and in paragraph 7 held thus: "7. The High Court seems to have completely lost sight of the parameters highlighted by this Court in a large number of Cases relating to exhaustion of alternative remedy. Additionally the High Court did not even refer to the judgment of another Division Bench for the assessment years, 1997-98 and assessment years 1998-99 in respect of ICI India Ltd. In any event the High Court ought to have referred to the ratio of the decision in the said case. That judicial discipline has not been adhered to. Looked at from any angle, the High Court's judgment is indefensible and is set aside." 50.2. A Constitution Bench of the Supreme Court in G.Veerappa Pillai v. Raman and Raman Ltd., reported in AIR 1952 SC 192 held that as the Motor Vehicles Act is a self contained code and itself provides for a forum for appeal/revision, the writ jurisdiction should not be invoked in matters relating to its provisions. A similar view was taken in Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Limited, reported in 1985 (19) E.L.T. 22 (SC) = AIR 1985 SC 330. 50.3. In Assistant Collector of ....
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.... D.C.Krishna reported in 2001 (6) SCC 569, the Honourable Supreme Court held that if the statute provides for remedy of revision or appeal, writ jurisdiction should not be invoked. 50.6. In Union of India v. T.R. Verma reported in AIR 1957 SC 882 the Honourable Supreme Court held that it is well settled that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative writ. It will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution unless there are good grounds to do otherwise. 50.7. In A. Venkatasubbiah Naidu v. S.Chellappan reported in (2000) 7 SCC 695 (vide para 22), the Honourable Supreme Court deprecated the practice of exercising the writ jurisdiction when an efficacious alternative remedy is available. 50.8. In W.P.No.981 of 2003 (Tax) (M/s.Khandelwal Soya Industries Ltd. v. State of U.P. and others) decided on 27.8.2003 a Division Bench of the Allahabad High Court dismissed a writ petition challenging the provisional assessment orders under the U.P.Trade Tax Act on the gro....
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....ng it, the remedy provided by that statute only must be availed of." 50.11. In Sharda Industries v. Commercial Tax Officer reported in 2008 (14) VST 276 (Mad), similar view was taken by a learned single Judge (M.Jaichandren, J.) and the said view of the learned single Judge was confirmed by a Division Bench. 51. When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. This Court further noticed the previous decisions of the Apex Court and this Court wherein the Court adverted to the rule of self-restraint that writ petition will not be entertained if an effective remedy is available to the aggrieved person. 52. Further, if effective and adequate opportunity was given to the dealers before passing the final assessment orders and principles of natural justice are not violated, the dealers can very well put to challenge the assessment orders of the authority concerned only before the appellate authority. 53. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be....