M/S.Kalai Constructions, v. The Commercial Tax Office,

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 07.02.2017

CORAM

THE HONOURABLE MR.JUSTICE RAJIV SHAKDHER W.P.Nos.3005 and 3006 of 2017 And W.M.P.Nos.2886 and 2887 of 2017 M/s.Kalai Constructions, Rep. by its Partner Mr.K.Kalaivanan ... Petitioner in both the W.Ps.

Vs.

The Commercial Tax Office, Nannilam Assessment Circle, Nannilam, Tiruvarur District.

... Respondent in both the W.Ps.

Common Prayer:

Petitions filed under Article 226 of the Constitution of India to issue a Writ of Certiorari, to call for the records of the respondent in TIN 33224020766/2008 - 2009 and TIN 33224020766/2009 - 2010 respectively, dated 19.12.2016 and quash the same as illegal, arbitrary and against the provisions of the Act.

For Petitioner : Mr.K.Soundararajan For Respondent : Mr.K.Venkatesh Government Advocate C O M M O N O R D E R 1.Issue Notice. Mr.K.Venkatesh, learned Government Advocate, accepts notice on behalf of the respondents. With the consent of the learned counsels for parties, the writ petitions are taken up for hearing and final disposal.

2.These are writ petitions, which lay challenge to two separate orders of even date i.e., 19.12.2016. 2.1.The writ petitions pertains to the Assessment Years (in short, AY) 2008-09 and 2009-10.

2.2.By virtue of the order passed, pertaining to AY 2008-09, the petitioner has been called upon to pay tax, in the sum of Rs.15,72,911/-, after requisite adjustments, along with penalty, amounting to Rs.4,72,732/-.

2.3.Similarly, in respect of AY 2009-10, the petitioner has been mulcted with tax, amounting to Rs.31,53,912 and penalty, amounting to Rs.4,21,336/-.

3.The record shows that revision notices were issued to the petitioner. These are notices which are dated 23.09.2016. The petitioner, apparently, sought a month's accommodation for furnishing a reply in the matter. This communication which was sent by the petitioner to the respondent/ assessing officer was received in his office, admittedly, on 01.11.2016. This aspect is reflected in the impugned orders itself.

3.1.Via, the revision notices dated 23.09.2016, the respondent/ assessing officer had proposed to disallow the entire Input Tax Credit (ITC). Furthermore, in particular, it also proposed to reverse ITC, according to the petitioner, based on the information available on the department's website. 4.The petitioner's grievance, presently, is that the impugned order was passed without disposing of his application for adjournment, which was received in the office of the respondent on 01.11.2016.

4.1.The petitioner's case, is that, he had no intimation as to whether or not, his request for adjournment was accepted by the respondent. In other words, according to the petitioner, the passing of the impugned orders, came as a surprise. 5.In support of his submission that the respondent/ assessing officer was required to deal with the application making a request for adjournment, reliance is placed on the Departmental's Circular dated 20.04.2001 and, the judgment of the Division Bench of this Court dated 11.10.2006, passed in W.A.No.1307 of 2006 and W.P.No.32349 of 2006, titled: M/s.Rainbow Traders Vs. The Commercial Tax Officer. 6.Mr.

Venkatesh, on the other hand, submits on behalf of the department that the impugned orders were passed after the period for which adjournment was sought had expired and therefore, the petitioner could have no grievance qua the impugned orders on this score. In other words, the learned counsel submitted that the petitioner had sought an accommodation for a period of one month, which was given, since, the impugned orders were passed well after the period of one month had passed, they were valid in the eyes of law.

7.I have heard the learned counsels appearing for the parties and perused the record.

8.The primary grievance of the petitioner is that there has been breach of principles of natural justice, as adequate opportunity was not given to represent his case. 9.Undoubtedly, the Circular dated 20.04.2001 in certain circumstances requires the respondent/ assessing officer to deal with the application. This aspect is exemplified in Clause 11 of the Circular dated 20.04.2001. For the sake of convenience, the said Clause is extracted hereunder:

"11.Where the assessing authority asked the dealer to appear and produce book on a particular day and the dealer files application for adjournment before that date, the assessing authority is bound to consider and pass order on application."

9.1.A mere perusal of the Clause would show that the respondent/ assessing officer is required to consider and pass an order on an application for adjournment when circumstances necessitate such accommodation. The underlying purpose being that principles of natural justice have to be given there with full play before coming to a conclusion one way or the other. Furthermore, importantly, Clause 11 also points in the direction that it is not as if adjournment has to be given for the asking. The officer concerned may in certain cases for good reason reject the application but after consideration. 9.2.This principle can be applied to the instant situation as well. By virtue of the revision notices the respondent/ assessing officer had proposed reversal of ITC. The petitioner sought time to respond to the proposals.

It is not as if several adjournments had been sought. A month's accommodation sought by the petitioner cannot be said to be unreasonable. The argument advanced by Mr.Venkatesh that the impugned orders were passed after the period of one month had passed is misconceived because the petitioner need to know where he stood qua his request for accommodation. It is for this reason that it was incumbent on respondent/ assessing officer to consider the request for accommodation.

10.The petitioner is, in my view, right in contending that he had no clue as to whether or not his request for adjournment had been considered. Therefore, quite naturally, as contended before me, by the learned counsel for the petitioner, the petitioner would have been taken by surprise, when the impugned orders were passed. Therefore, notwithstanding the fact that the orders were passed after a period of one month had expired, which is the period of accommodation sought for by the

petitioner, the grievance of the petitioner did not get addressed, which is that he had no opportunity to present his case.

11.Thus, without getting into the merits of the matter, the impugned orders are set aside. Liberty is however, granted to the respondent/ assessing officer to redo the assessment after giving due opportunity to the petitioner. For this purpose, the petitioner will appear before the respondent/ assessing officer on 28.02.2017 at 11a.m. In case, the said date is not convenient to the respondent/ assessing officer, he shall fix a fresh date which will be proximate to the date indicated above. The petitioner will present himself before the respondent/ assessing officer, with documents, in original, on which, he seeks to place reliance to advance his case. Similarly, respondent/ assessing officer will furnish materials and information, which is in his possession, based on which, he proposes to reverse the ITC and/ or impose tax or penalty on the petitioner.

12.The writ petitions are disposed of, in terms of the aforementioned directions. Consequently, the connected pending applications are also closed. However, there shall be no order as to costs.

-s/dAssistant Registrar True Copy Sub-Assistant Registrar To The Commercial Tax Office, Nannilam Assessment Circle, Nannilam, Tiruvarur District.

+1 cc to the Special Government Pleader taxes sr 7827 +1 cc to K.Soundararajan Advocate sr 7628 W.P.Nos.3005 and 3006 of 2017 And W.M.P.Nos.2886 and 2887 of 2017 nr(co) aa14/02/2017