Failure to furnish details of the change in constitution can be treated as an irregularity and not an illegality, and penalizing the dealer by denying the claim of entire input tax credit for such irregularity is arbitrary.

Heard Mr.P.Rajkumar, learned counsel for the petitioner and Mr.K.Venkatesh, learned Government Advocate (Taxes) appearing for the respondent.

2. The petitioner, which is a registered dealer on the file of the respondent, was originally a proprietorship concern with one Mr.K.Punniakoti Mudaliar as its sole proprietor. He is the father of one Mr.K.Srikanth - the present proprietor of the petitioner herein. The proprietorship concern is a LPG distributor of M/s. Indian Oil Corporation Limited, which has also been registered on the file of the respondent Department under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (hereinafter referred to as the Act).

3. Due to advanced age and illness of the father of the present proprietor of the petitioner, the proprietorship concern was converted into a partnership firm and the present proprietor of the petitioner namely Mr.P.Srikanth was inducted as a partner with effect from 1.4.2008 and the firm was registered on the file of the Registrar of Firms, Kancheepuram. The change in the constitution of the dealer was intimated to M/s. Indian Oil Corporation Limited.

4. While so, the father of the present proprietor of the petitioner died and the present proprietor of the petitioner, being a distributor of LPG, had to carry on business and he has been filing monthly returns and paying necessary taxes in the name of the proprietorship concern, as the name of the reconstitution of the proprietorship concern into a partnership firm was not intimated to the respondent Department. The petitioner was advised to obtain a fresh registration from the Department and accordingly, the petitioner informed the change in the constitution by letter dated 20.4.2015 and request for allotment of a fresh tax payer identification number.

5. However, the respondent issued notice dated 23.4.2015 stating that the petitioner - M/s. Sri Kamatchi Gas Service was originally registered as a proprietorship concern and the sole proprietor died on 9.9.2013, after which, his son was running the business using the same tax payer identification number allotted to his late father without intimation to the Department and without surrendering the same and proposed to pass best judgment assessment treating the purchases and sales as unregistered purchases and sales.

6. The present proprietor of the petitioner submitted his objections on 28.4.2015 stating the proprietorship concern became a partnership firm with effect from 1.4.2008 and after the demise of his father, it is a proprietorship concern with the son Mr.P.Srikanth as the sole proprietor. The present proprietor of the petitioner pleaded ignorance of the procedural formalities of intimating the Department of every change in the nature and constitution of the dealer. He pointed out that the monthly returns were duly filed and necessary taxes paid without default even after the demise of the original proprietor. He further pointed out that he appeared before the respondent and offered to surrender the old tax payer identification number and requested for issuance of a new tax payer identification number.

7. Thereafter, another notice was issued by the respondent dated 29.4.2015 for the assessment year 2013-14 stating that such a request is not entertain-able. Ultimately, the respondent passed the order of assessment dated 25.5.2015 reversing the claim of input tax credit from 9.9.2013. Subsequently, for the assessment year 2014-15 also, similar orders were passed by order dated 6.7.2015, reversing the entire claim of input tax credit on the ground of filing incorrect and incomplete returns. These orders are challenged in these writ petitions.

8. The learned counsel for the petitioner submitted that for a brief period, the proprietorship concern was converted into a partnership firm and subsequently, on and after 9.9.2013, it is again a proprietorship concern and that merely because the petitioner had not intimated about the change in the constitution of the dealer,