M/S.Nana Industries, v. The Commercial Tax Officer

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 24.10.2016 C O R A M THE HON'BLE DR.JUSTICE S.VIMALA W.P.(MD) No.20364 of 2016 & WMP (MD) No.14563 of 2016 M/s. Nana Industries, Rep. By its Managing Partner, S.Rengarajan, No.171 Tamizh Nagar, 2nd Street, Medical College Road, Thanjavur 613 007 ... Petitioner Vs.

The Commercial Tax Officer, Thanjavur II Assessment Circle, CT Buildings, Sachidananda Moopanar Road, Thanjavur 613 001 ... Respondent Prayer: Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, to call for the records of the respondent in TIN No.33826296541/2015-16 dated 28.06.2016 and to quash the same as illegal, arbitrary and also against the provisions of the Act.

For petitioner : Mr. K.Soundararajan For Respondent : Mr. R.Karthikeyan, AGP., ---

O R D E R

The petitioner, an assessee by the respondent and a manufacturer of steel windows, doors and frames, has filed this petition, challenging the proceedings of the respondent, dated 28.06.2016, by which, the taxable turnover of the petitioner and the penalty being 150% of the tax, has been imposed. 1.2. The petitioner used to purchase the raw materials from the local registered dealers and after manufacturing, used to sell the products to various registered dealers within the state of Tamil Nadu.

1.3. The petitioner declared total purchase turnover of Rs.18,20,260/- and shown as Input Tax Credit of Rs.94,953/-. Similarly, total sales turnover was reported at Rs.13,97,227/- and the corresponding Output Tax was shown as Rs.90,355/-, which has

been adjusted against the ITC available.

1.4. Manual returns were also filed on 22.01.2016 and 24.02.2016 with acknowledgement.

1.5. Stating that the petitioner did not file any returns, the respondent has sent a notice, dated 23.05.2016 and also claimed that the petitioner had effected purchase of Rs.22,09,964/-, but not reported any sales turnover. The respondent proposed to assess the deemed sale value under Section 22 (4) of the Tamil Nadu Value Added Tax Act, 2006, (hereinafter referred to as "the Act") at Rs.49,59,160/- and proposed to impose penalty under Section 22 (5) of the Act.

1.6. Despite the petitioner filing objections on 06.06.2016, with a request to drop the proposed levy of tax and penalty by the impugned order, the respondent has confirmed the proposal intimating that the petitioner did not file e-monthly returns for the year 2015-16. The order passed is in violation of Section 22 (4) of the Act.

2. The contention of the learned counsel for the petitioner is that the respondent did not offer an opportunity of hearing as mandated under Section 22 (4) of the Act. It is further contended that while making estimation the respondent has relied upon third party records and if that is to be relied upon, opportunity of hearing should have been given to the petitioner. On these two grounds, the petitioner seeks to quash the order of the respondent.

3. It is necessary to consider the provisions of Section 22 of the Act, in order to appreciate the contentions raised, which reads thus:- "22.Procedure to be followed by assessing authority.

(1) ....

(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.

(5) In addition to the tax assessed under subsection (4), the assessing authority shall, in the same order of assessment passed under sub-section (4) or by a separate order, direct the dealer to pay by way of penalty, a sum which shall be, in the case of failure to submit return, one hundred and fifty per cent of the tax assessed:

Provided that no penalty under this sub-section shall be imposed after the period of five years from

the date of assessment order under this section unless the dealer affected has had a reasonable opportunity of showing cause against such imposition."

4. A perusal of the impugned order reads that, on verification of the TNVAT Site, the respondent has found out that no e-returns are filed. It is not the case of the petitioner that they filed e-returns. It is their case it is only the manual returns, which were filed. It is open to the respondent to call upon the assessee to produce the records in support of the claim, when objections are stated to have been sent on 06.06.2016. The nature of objections raised do not find place in the order.

5. Even assuming that no returns are filed by the petitioner, opportunity of hearing is mandated under Section 22

(4) of the Act and it is not the case of the respondent that such a reasonable opportunity of being heard was afforded by the respondent.

6. Under such circumstances, the impugned order, dated 28.06.2016, is set-aside and the matter is remitted back to the respondent with a direction to the provide opportunity of personal hearing to both sides and to pass orders in accordance with law.

7. This writ petition is ordered accordingly. No costs. Consequently, the connected WMP is closed.

Sd/- Assistant Registrar /True copy/ Sub Assistant Registrar To The Commercial Tax Officer, Thanjavur II Assessment Circle, CT Buildings, Sachidananda Moopanar Road, Thanjavur 613 001 +1 CC to M/s.K.SOUNDARARAJAN, Advocate, SR No.62979 +1 CC to M/s.THE SPECIAL GOVERNMENT PLEADER, SR No. 63286 SRK PSM/CM-MSA/17.03.2017/3P/4C W.P.(MD) No.20364 of 2016 & WMP (MD) No.14563 of 2016 24.10.2016