M/S.Kumar Impex, v. The Commercial Tax Officer
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 08.08.2017
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.Nos.20897 to 20902 of 2017 & W.M.P.Nos.21770 to 21775 of 2017 M/s.Kumar Impex, Rep. by its Proprietor, Mukesh Kumar Prohit, 16, Narayana Mudali Stree, 1st Floor, Chandrakanta Complex, Sowcarpet, Chennai - 79.
... Petitioner in all Wps Vs.
The Commercial Tax Officer, Sowcarpet Assessment Circle, Chennai - 600 001.
... Respondent in all Wps Petitions filed under Article 226 of the Constitution of India to issue a Writ of Certiorarified Mandamus calling for the records on the flies of the respondent in TIN/33060241637/20082009, 2009-2010, 2010-2011, 2011-2012, 2012-2013 & 2013-2014 and quash the order passed therein dated 07.06.2017 and direct the respondent to assessment in accordance with law as provided under the TNVAT Act, 2006.
For Petitioner : Mr.A.P.Srinivas For Respondent : Mr.S.Kanmani Annamalai, Additional Government Pleader Assisted by Mr.K.Venkatesh, Government Advocate C O M M O N O R D E R Heard Mr.A.P.Srinivas, learned counsel for the petitioner and Mr.S.Kanmani Annamalai, learned Additional Government Pleader for the respondent assisted by Mr.K.Venkatesh, learned Government Advocate. With the consent on either side, these writ petitions themselves are taken up for disposal.
2.The orders impugned in these writ petitions are assessment orders under the provisions of Tamil Nadu Value Added Tax Act, 2006 ("TNVAT Act" in short) for the assessment years 2008-2009 to 2013-2014. Three issues common arises in all the assessment years, viz., (i) On verification of the purchase details from otherdealer Annexure-II taken from the official website, the respondent called upon the petitioner as to why they should not be directed to pay tax and why penalty should not be levied under Section 27(5)(ii) of the TNVAT Act.
(ii) On verification of the check post movements taken from the website it was alleged that the petitioner has not reported certain interstate sales in the monthly returns and therefore, there was a proposal to demand tax on such transaction and also to levy penalty under Section 27(4)(ii) of the TNVAT Act. (iii) On information received from the Directorate of Revenue Intelligence, it came to light that the petitioner was liable to pay customs duty to the tune of Rs.8 Crores and in the order passed by the Court of Chief Metropolitan Magistrate EOII, Egmore, Chennai - 8 in Crl MP No.3658/13 in RR No.97/13 dated 20.12.2013, it is declared that the petitioner's turnover is Rs.44.65 Crores through 169 consignments and customers duty on that is about 10 Crores.
3.On receipt of the notice, the petitioner submitted their interim reply pointing out the following in respect of the three years which arise in all the assessment years, viz., (i) With regard to alleged mismatch between the Annexure-I filed by the petitioner and the Annexure-II of the other end dealer, the petitioner requested to furnish the details of the dealers who are said to have not reported their local/interstate purchase turnover in the monthly returns and when they have not reported their turnover, the petitioner being innocent dealers cannot be blamed. However, the sellers have already informed about the turnover through their monthly returns in Form No.1 every month and the same has been filed in the office of the respondent and appropriate taxes were also paid. (ii) With regard to entries in the check post which were relied to allege sales suppression, the petitioner requested for furnishing the copy of the check post extract and pointed out that unless those copies are furnished they would not be in a position to give appropriate reply.
(iii) With regard to allegation made based on an order passed by the Chief Metropolitan Magistrate Court, it was pointed out that the notice dated 15.09.2014 has been issued based on the proposal received from the Enforcement Officer dated 12.08.2014. However, the copy of the same has not been
enclosed and therefore, they are unable to file further reply and unless the copy is furnished they would be not in position to know as to what is the allegation against them and therefore, a request was made to furnish the copy of report dated 12.08.2014. Further without prejudice to such report, it was stated that in so far as stock seized by the Customs Authority is concerned, there was no notice or any order received from the Office of the Customs Authorities till the issuance of the show cause notice by the respondent dated 15.09.2014, and that the seized items have been directed to be released by this Court in an order passed in a writ petition. 4.The respondent appears to have issued two other notices for which replies were sent by the petitioner on the same lines explaining about the seizures that have been made etc.
, and pointed out that as per Sales Taxes law, the sale price of any imported goods is based on the cost of imported goods, customs and other duties paid and gross profit and the respondent has issued notice proposing levy of sales tax by omitting customs duties payable for the imported goods and the cases are yet to be adjudicated by the Customs Department. The petitioner further stated that the respondent cannot arrive at the actual sales value without having the details of the customs duty assessed by the Department for the respective years, as customs duties paid is also component part to determine the taxable turnover under the Sales Tax law.
5.Therefore, the petitioner requested the respondent to wait till the adjudication under the Customs Act by the Customs Authority/DRI is completed. Further, the petitioner requested that fresh notice may be issued for each year after adjudication of the cases is over by the Customs Authority and also to give them an opportunity of personal hearing.
Once again, the respondent issued another notice for which reply was sent pointing out that all documents have been seized by the Directorate of Revenue Intelligence and in the absence of records, they are not in position to furnish their objections, as no records are available to submit their reply for the assessment years 2008-2009 to 2013-2014 and the DRI have not returned the seized documents till date and hence, the petitioner submitted that they would submit their objection as soon as documents were received from the DRI, Chennai. 6.Notices dated 06.04.2016 and 31.05.2016 were issued by the respondent giving 15 days time to file objection, which notices appear to have been returned with an endorsement "Unclaimed".
Further the respondent pointed out that enquiry with the Directorate of Revenue Intelligence revealed that show cause notice dated 22.06.2016, was issued and xerox copies of the records seized could be obtained by the petitioner on request.
The petitioner was directed to produce the records. The petitioner submitted a representation dated 13.03.2017 requesting for extension of time by 15 days and the respondent, after waiting for the said period, has completed the assessment and confirmed the proposal and made the assessment of the entire turnover for the years 2013-2014.
7.The petitioner has challenged the impugned assessment order on several grounds. In so far as the mismatch of details based on details culled out from the official website and the allegation of sales suppression based on check post details are concerned, the imposed order is in violation of principle of natural justice as the documents sought for by the petitioner were not furnished. With regard to mis-declaration of value is concerned, it has been stated in the imposed order that the DRI has issued show cause notice. Merely because show cause notice has been issued by the DRI, it would not give an automatic cause of action for the respondent proposing levy of sales tax, as the respondent has not done any independent enquiry based on the information that they have received from the DRI.
That apart, unless and until the adjudication is over by the DIR no finality could be attached to those processings and the respondent has to necessarily defer further proceedings. 8.The learned Government Advocate to the counter affidavit filed by the respondent and submitted that the dealers in spite of having been given sufficient opportunity to submit their reply, have failed to submit their reply. Therefore, the respondent has passed the impugned order of assessment and if the petitioner is aggrieved, they should file an appeal against the said order.
9.The learned Government Advocate referred to the letter dated 13.03.2017, given by the petitioner requesting for 15 days time to reply to the notice dated 15.02.2017 on the health ground and even after granting reasonable time, the petitioner did not submit their objections. Therefore, the impugned assessment order has been passed.
10.After hearing the parties elaborately and perusing the materials placed on record including the counter affidavit filed by the respondent and the typed set of papers filed by the respondent, the following conclusion is arrived: (i) So far as the two grounds on which the assessments have been revised viz., with regard to mismatch of details culled out from the official website and the allegation of sales suppression based on check post entires once again culled out from the Departmental website, it is clear that in spite of the request made by the petitioner to furnish the details, the respondent has not furnished the details. Therefore, the
impugned order is liable to be set aside on those grounds as it is in violation of the principles of natural justice. (ii) The third ground on which the assessments have been revised is on the ground of mis-declaration of value. It is evident that these allegations which have been mentioned in the show cause notice are not based on any independent enquiry conducted by the Commercial Taxes Department, but solely based upon the information received from the DRI. Admittedly, the DRI has issued show cause notice only on 22.06.2016. Thus, the case is yet to be adjudicated and the duty liability is yet to be crystallized, unless and until the duty liability is crystallized, alleged sales suppression cannot be ascertained. Thus, the basis for fixing the sale value of imported goods is yet to attain a finality.
The respondent has referred to certain allegations which were made against the petitioner in the counter affidavit filed by the DRI, while opposing the bail petition filed by the petitioner before the Addl. Chief Metropolitan Magistrate, EO-II, Egmore, Chennai. However, the said Court has not rendered any finding on such allegations and bail has been granted on the ground that the petitioner/accused was arrested and he has been remanded to Judicial custody for 40 days.
11.Therefore, in my considered view, the averments in the counter affidavit filed by the DRI in the bail petition nor the averments which are set out in the show cause notice issued by the DRI dated 22.06.2016, can ipso facto be the basis for demand of sales tax. It is well open to the respondent to rely upon such material based on information received from the DRI. What is required to be done is to conduct independent enquiry for which the petitioner should be given opportunity of personal hearing. This can be done only after the DRI completes the adjudication of the show cause notice dated 22.06.2016, as all documents are in the custody of the DRI.
Therefore, the respondent has to necessarily await the adjudication of the case by the DRI or the Customs Officials with regard to the allegation of sales suppression/mis-declaration of value. 12.Thus, for the above all reasons these writ petitions are partly allowed with the following directions; (i) the respondent is directed to furnish all the details in respect of the allegation of mismatch and allegation of interstate sales suppression culled out from the website and provide all details including invoice numbers, name of the dealer and TIN number etc., and grant 15 days time to the petitioner to file their objections and thereafter, grant an opportunity of personal hearing and re-do the assessment under those two heads.
(ii) so far as the assessment made under the head misdeclaration of value dated 22.06.2016, is concerned subject to the out come of the show cause notice issued by DRI dated 22.06.2016, the respondent is at liberty to initiate proceedings under the TNVAT Act. In such event, the petitioner cannot state that such action is barred by limitation, since the petitioner in this writ petition sought for deferment of the proceedings till adjudication of the show cause notice dated 22.06.2016 With the above reasons and directions, these writ petitions are partly allowed. No costs. Consequently, the connected miscellaneous petitions are closed.
Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar abr To The Commercial Tax Officer, Sowcarpet Assessment Circle, Chennai - 600 001.
+1cc to Mr.A.P.Srinivas, Advocate, S.R.No.57098 +1cc to the Special Government Pleader(T), S.R.No.57087 W.P.Nos.20897 to 20902 of 2017 SAI(CO) CA(04/09/2017)