TaxTMI 
TaxTMI 
2019 (9) TMI 698
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....ed Tax Rules, 2007'. This set of rules shall hereinafter be referred to as 'TNVAT Rules' wherever necessary. 5.Factual matrix in a nutshell i.e., facts that are imperative for appreciating this order are as follows: a) Writ petitioner is an entity which has been registered as a Trade Union under Indian Trade Union Act, 1926. b) Writ petitioner embarked upon the exercise of creating a residential township in the name and style "Unity Enclave' consisting of 2100 residential flats in 21 towers at a construction cost of little over Rs. 547 Crores at Mambakkam, Chennai - 600 127. This shall hereinafter be referred to as 'said project' for the sake of convenience and clarity. Said project was handed over by writ petitioner to three different contractors and this Court is informed that one is a building contractor, the second is an architect entity and the third entity is a project management consultant. There is no disputation or disagreement that the writ petitioner has not registered itself as a dealer under TNVAT Act. c) Enforcement Wing officials of the Tax Department conducted a surprise inspection at the office of the writ petit....
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....mitted that impugned order was served on the writ petitioner on 12.06.2019. h) Assailing the impugned order, instant writ petition has been presented in this Court on 26.07.2019. 6. Having set out the factual matrix in a nutshell, this Court now proceeds to examine the grounds on which the impugned order was assailed by the learned counsel for writ petitioner at the hearing. 7. Though several averments have been made, grounds have been urged and contentions have been raised in the affidavit filed in support of writ petition, the grounds on which impugned order was assailed by the learned counsel writ petitioner at the hearing are broadly as follows: a) No personal hearing has been granted by the respondent before passing the impugned order and this, according to learned counsel, is violation of 'Principles of Natural Justice' ('NJP' for brevity); b) The detailed reply sent by the writ petitioner being reply to SCN/revisional notice dated 12.01.2017 (reply is dated 08.03.2017) has not been considered. c) There are errors in the computations that have been made by the Assessing Officer in the impugned order; d) The re....
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....gned order. Therefore, it becomes necessary to examine whether grant of personal hearing is statutorily imperative while an Assessing Officer makes a revised assessment under Section 27(1) of TNVAT Act. It is also necessary to examine as to whether it is statutorily imperative for an Assessing Officer to give personal hearing/hold personal hearing in every case in which a revised assessment is made under Section 27(1) of TNVAT Act. b) This takes us to the provision, namely Section 27(1) and more particularly the proviso to sub-sections (1) and (2) of Section 27. This Court deems it appropriate to extract Section 27(1) and 27(2) together with the proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act. '27. (1) (a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (3), at any time within a period of five years from the date of assessment order by the assessing authority, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as....
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.... have been called for from writ petitioner for verification, writ petitioner has also produced those documents. What writ petitioner could have projected in a personal hearing has not been articulated. Therefore, this court comes to the conclusion that on a demurrer, writ petitioner has not been able to demonstrate that any prejudice has been caused to writ petitioner because of personal hearing not being held. 14. Faced with the above situation, learned counsel for writ petitioner submitted that the impugned order should be construed as one made under Section 22(4) of TNVAT Act. 15. Therefore, this Court deems it appropriate to extract Section 22 (4) together with the proviso thereto. '22 (1)...... (2) ...... (3) ........ (4) If no return is submitted by the dealer for that year, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment, subject to such conditions as may be prescribed: Provided that before taking action under this sub-section, the dealer shall be given a reasonable opportunity of being heard.' (Underlining made by this Cour....
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....nt. 19. This takes us to a circular, which has been issued in this regard. 20. Attention of this Court was drawn to a circular being Circular No.7/2014 (BB1/3589/2014) dated 03.02.2014 (hereinafter 'said circular' for the sake of convenience and clarity). This Court is informed that the said circular was issued by the Office of the Commissioner of State Tax, Chepauk, Chennai. 21. This Court deems it appropriate to extract entire Circular No.7, which reads as follows: 'Guidelines and instructions regarding disposal of Tax Cases. (Circular No.7/2014 (BB1/3589/2014), dated the 3rd February, 2014) Subject: Writ petition/writ appeal/tax case (revision)- Disposal of cases- Meeting with Government Advocate - Certain guidelines and circular instructions issued. '1. During the course of meeting with the Law Officers of Madras High Court on January 30, 2014, it has been represented by them that many assessing officers are passing orders without giving reasonable opportunity to dealers and violating the principles of natural justice, which has resulted in mounting numbers of writ petitions in the High Court leading to interim stay r....
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....sessment: Under the TNVAT Act, 2006, the assessing officers usually issue orders to reverse the ITC on obvious reasons. During the current financial year, the assessing officer may issue notice to reverse the ITC for each month separately under Section 25 of the TNVAT Act, 2006. After closure of the financial year, the assessment should be completed initially under deemed assessment under Section 22 of the Act and then only they should take revision proceedings under Section 27 of the Act. Before passing revision order, the dealer should be given reasonable opportunity and personal hearing it required so as per Section 22(4) of the TNVAT Act, 2006. No order of revision should be made without affording an opportunity to the dealer as provided under Sections 22, 25, 27 of the Act. (c)Filing of tax case (R): In regard to filing of tax case (revision), the time-limit to file tax case is 90 days from the date of receipt of the order of Sales Tax Appellate Tribunal by the Additional State Representative. A delay of 90 days in filing tax case beyond the first 90 days can be condoned by the High Court. In such cases, a delay condone petition should also ....
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.... not to collect cheques under duress. In such cases, assessing officer shall collect taxes after making assessment as per provision of the Act. 4. The receipt of this circular should be acknowledged by next post and you are requested to communicate this circular and obtain acknowledgement from the assessing officers under your control.' 22. What is of relevance for the instant case on hand is Point No.3(b) captioned 'Revision of Assessment'. 23. A careful reading of Point 3(b) of said Circular reveals that Circular also has noticed the difference between the two expressions used in the two provisos i.e., proviso to Section 22(4) and proviso to Sections 27(1) and 27(2). The reason is, Circular makes it clear that the dealer should be given 'reasonable opportunity and personal hearing' as per Section 22(4) whereas while making a reference to Sections 22, 25 and 27, circular says that order should not be made without 'affording an opportunity to the dealer'. Therefore, even the circular has instructed the Assessing officer to give personal hearing only when the exercise is under Section 22(4). With regard to generic Sections 22, 25 and ....
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....ction 22(4), personal hearing is statutorily imperative, in revised assessment under section 27(1) or (2), only sufficient opportunity to show cause is statutorily imperative and personal hearing is optional. Therefore, the issue so narrowed down in this matter that it is narrowed down to the question as to whether impugned order in the instant case should be treated as one under section 27(1) as contended by learned Revenue counsel or one under section 22(4) as contended by learned counsel for writ petitioner. In the instant case, no doubt, writ petitioner has not registered itself as a dealer, therefore, is not a registered dealer within the meaning of section 2(30) of TNVAT Act and therefore, has not filed returns. 28. On first blush, the argument of learned counsel for writ petitioner that this is a case of no returns comes across as an attractive submission, but on a closer scrutiny, it becomes clear that impugned order qualifies as a revised assessment order under section 27(1) and not as a best judgment assessment under section 22(4) for more than one reason and they are : (a) Section 22(4) does not deal with no returns alone. It also deals with incomplete return....
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....ler' is a family, 'registered dealer' is a spices. Neither section 22(4) nor section 27(1) are restricted to the spices of 'registered dealer'; (h) The fact that it s a case of escaped assessment, does not per se mean that it has to be best judgment assessment. It only means that there is assessment which ought to have happened. Therefore, there is notional assessment and that is being revised. This is the reason why the statute has deployed the term 'dealer' in both section 22(4) and section 27(1). Therefore, reading it otherwise, more so in the manner in which learned counsel for writ petitioner wants this court to interpret section 22(4) is clearly impermissible. 29. If section 22(4) of TNVAT Act is dissected, it provides for assessing officer assessing the dealer to the best of assessing officer's judgment after making such enquiry that is considered necessary under five different circumstances and they are : (a) dealer not submitting any return for any period of the year, (b) return filed by the dealer being incomplete, (c) return filed by the dealer being incorrect, (d) return filed by the dealer not being accompanied by pr....
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....registered itself as a dealer and therefore, it would be a case of 'dealer' within the meaning of Section 2(15). Considering the scope of instant writ petition, it may not be necessary to delve further into this aspect. It would suffice to say that this Court has noticed that terms 'dealer' as well as 'registered dealer' are terms of art which have been defined under Section 2(15) and 2(30) of TNVAT Act respectively. 32. This takes us to the next aspect of argument i.e., the reply to the show-cause notice/revisional notice not being considered. 33. A perusal of the impugned order reveals that there is a reference to the reply to the show-cause notice. The impugned order also says that reply has been examined carefully. What according to the Assessing Officer are salient points in the reply have been set out and the same have been answered. This portion of the impugned order reads as follows: 'For the above defects notice issued from this office vide the reference second cited. They have filed their reply with records. This reply filed by them has been examined carefully. (a) In respect of purchase of Fire Fighting Pipes, the in....
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....ucted by the Enforcement Wing officials and the proposal. As mentioned supra, this Court has no hesitation in accepting the submission of the learned Revenue Counsel that the inspection by the Enforcement Wing officials and the proposal made by the Enforcement Wing is the genesis for the revision and therefore, it is inevitable to make a reference to the Enforcement Wing inspection and their proposal. Therefore, the moment there is a reference to the proposal of the Enforcement Wing officials in the Assessment Order, it cannot be gainsaid that it is in violation of Narasus's principle. To be noted, Narasus principle as laid down in Narasus Roller Flour Mills Vs. Commercial Tax Officer (Enforcement Wing), Sankagiri reported in (2015) 81 VST 560 (MAD). 37. Narasus principle is to the effect that Assessing Officer should apply his/her mind independent of the proposal made by the Enforcement Wing and should arrive at a conclusion. In the instant case, after referring to the proposal of the Enforcement Wing, the Assessing Officer has certainly applied her mind to the SCN / revisional notice as well as the objections to the same and given some finding, however correct or however e....
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....d Bank of India Vs. Satyawati Tondon and others reported in (2010) 8 SCC 110) wherein it has been held that when it comes to cases pertaining to taxes, cess etc., i.e., fiscal laws in general, rule of alternate remedy has to be applied with utmost rigour. Satyawati Tandon principle was reiterated by Hon'ble Supreme Court in K.C.Mathew case [Authorized Officer, State Bank of Travancore Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevant paragraph in K.C.Mathew case is paragraph 10 and the same reads as follows: '10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp.123 & 128, Paras 43 & 55) "43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a....
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....t fall in any one of the exceptions. To be noted, exceptions enumerated are not exhaustive, but are only illustrative exceptions as required for the limited extent qua factual matrix of this case. 41. This takes us to the alternate remedy available to the writ petitioner in the instant case. This Court is informed without disputation or disagreement by both sides that an alternate remedy is available to the writ petitioner qua the impugned order by way of an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. Therefore, with regard to the grounds canvassed on merits, which are more in the nature of errors in computation, it is well open to the writ petitioner to avail alternate remedy of a statutory appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. 42. This Court has also examined the limitation aspect of the matter. As already alluded to supra, the impugned order is dated 28.05.2019 and this Court is informed by learned counsel for writ petitioner, on instructions, that it was served on the writ petitioner on 12.06.2019. A perusal of Section 51 of TNVAT Act it reveals that the time limit available ....