The importance of providing an opportunity to the assessee prior to framing assessments and the directive to follow the procedure outlined in Circular No. 5/2021 for dealing with mismatch cases.

JUDGMENT

(Common Prayer: Writ Petitions filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari calling for the records on the files of the respondent in CST.348588/2007-08, 2009-10, 2011-12, 2013-14 2014- 15 dated 04.03.2019 and Tin No.33132600784/2014-15 and quash the same as being without jurisdiction and authority of law and contrary to the principles of natural justice.)

Common Order

1. The petitioner challenges orders of assessment passed under the provisions of the Central Sales Tax Act, 1956 for the periods 2007-08, 2009-10, 2011-12, 2013-14 and 2014-15 and also under the provisions of the Tamil Nadu Value Added Tax Act, 2006 for the period 2014-15, all dated 04.03.2019.

2. The petitioner is a dealer and assails the assessments on several grounds including specifically that no opportunity was granted to it prior to framing of the impugned assessments. Admittedly, the assessments have been made based upon the returns filed by third party dealers as reflected in the website of the Commercial Taxes Department. Inter alia, the respondent has also obtained and utilised the data from check-posts as well as other connected records pertaining to other dealers.

3. The above third party material that the respondent proposes to use, adverse to the interests of the petitioner, have been referred to in the preassessment notices dated 23.03.2018 that have been issued prior to framing of the impugned assessments.

4. The petitioner has responded to the notices objecting to the proposed conclusion of the Assessing Authority to the effect that the third party material in possession of the Department including the Enforcement officials indicate escapement of turnover/tax in its returns of income. The petitioner also sought the particulars relied upon by the authority, which, admittedly, have not been supplied to it.

5. In the impugned assessments, the Assessing Authority merely proceeds to confirm the proposals in the show cause notices denying the exemption claimed by the petitioner on the ground that no proof has been supplied by it in support of its claim. In denying the petitioner's claim, substantial reliance has been placed upon the details culled from the check posts as well as other materials in his possession.

6. The impugned assessments thus been, admittedly, been framed on the basis of mismatch of details as per the petitioner's returns as compared with the details obtained from the returns of the selling/purchasing third party dealers.

7. The issue of mismatch has long plagued assessees and the Commercial Taxes Department and as early as in 2018, pursuant to several decisions of this Court, the Special Commissioner/Commissioner of Commercial Taxes had directed the Assessing Authorities to keep assessments relating to mismatch of particulars in abeyance till a proper and appropriate scheme be formulated for addressing this issue.

8. On 24.02.2021, a Circular has been issued bearing No.5/2021, wherein, the Principal Secretary/Commissioner, Commercial Taxes has dealt with this issue in extenso. The entirety of the Circular is extracted hereunder:

“Circular No. 5/2021 LW10/12521/2016

Office of the Principal Secretary/Commissioner of Commercial Taxes, Chepauk, Chennai – 600 005. Dated: 24.02.2021

Circular

The Hon'ble High Court of Madras in a batch of cases involving in denial of input tax credit or arising of tax liability due to purchase and sales suppression on the basis of the computer generated mismatch report from the Annexure and II of the returns of the purchaser vis-a-vis