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IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
M/S. Riverside Dreamscapes Pvt. Ltd., Represented by its Managing Director Nithin Lakshmanan, Kotagiri - Appellant
Versus
The Commercial Tax Officer, Kotagir - Respondent
WP. Nos. 13657, 13665, 13668, 13671 & 13674 of 2019 WMP. Nos. 13720, 13722, 13723, 13726 & 13729 of 2019
Decided On : 23-06-2022
Tamil Nadu Value Added Tax Act, 2006 - Assessment Orders - Opportunity for Response - Violation of Principles of Natural Justice - Tax Liability Determination - Writ Petitions
Fact of the Case:
The writ petitions challenge assessment orders under the Tamil Nadu Value Added Tax Act, 2006 for the periods 2011-12 to 2015-16. The petitioner, a family-owned company, had entrusted construction to a sub-contractor and claimed compounding provisions for tax payment. The enforcement wing inspected the premises and demanded tax, leading to show cause notices and opportunities for response. The petitioner repeatedly sought extensions but failed to provide an effective reply. The court considered the violation of principles of natural justice and the determination of tax liability.
Finding of the Court:
The court found that sufficient opportunity had been granted to the petitioner, and there was no effective compliance with the notices. The court also noted that the determination of tax liability was a mixed question of law and fact that could only be answered by the authority, relegating the petitioner to statutory appeal. The preliminary question of tax liability determination was to be made by the respondent within three weeks from the date of the institution of the appeal.
Issues: Violation of principles of natural justice, determination of tax liability, sufficiency of opportunity for response, and pre-deposit condition for appeals.
Ratio Decidendi: The court held that the petitioner had been granted sufficient opportunity for response and that the determination of tax liability was a mixed question of law and fact to be decided by the authority. The court also emphasized the need for the respondent to determine tax liability within three weeks from the date of the appeal's institution.
Final Decision: The writ petitions were disposed of, with the petitioner relegated to statutory appeal for the determination of tax liability. The respondent was directed to determine tax liability within three weeks from the date of the appeal's institution.
JUDGMENT
(Common Prayer: Writ Petitions filed under Article 226 of the Constitution of India, to issue aWrit of Certiorarified Mandamus, calling for the records of the impugned proceedings of the respondent bearing TIN No.33642561170/2011-12, TIN No.33642561170/2012-13, TIN No.33642561170/2013-14, TIN No.33642561170/2014-15 and TIN No.33642561170/2015-16 respectively dated 11.04.2019, quash the same and consequently direct the respondent to provide opportunity to file effective reply.)
1. These writ petitions challenge orders of assessment dated 11.04.2019 for the periods 2011-12 to 2015-16 passed under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short 'Act').
2. The petitioner is a company that claims to be family owned. It had developed 47 Villas in its own property and for the purposes of such development had, according to it, entrusted the construction to a sub-contractor, one M/s.M.G.S. Builder and Company, Coonoor. According to the petitioner, both the Contractor as well as it itself had paid tax under the compounding provisions not realizing that the project was one and the same and liability for tax would fall only upon one or the other.
3. While this is so, the enforcement wing had inspected the premises of the petitioner company as well as that of the builders and on the ground that the petitioner had made interstate purchase of timber which militates against its claim for compounding under Section 6 of the Act, had demanded and collected tax under Section 5 of the Act, which was challenged successfully by the petitioner in an earlier round of writ petitions.
4. Show cause notices were thereafter issued calling for the responses of the petitioner. The opportunities granted ranged from 20.08.2018 to 30.01.2019. In response to show cause notice dated 20.08.2018, the petitioner made a request on 06.09.2018 seeking 15 days time on the ground that a verification of its accounts was required to respond to the show cause notice.
5. The respondent also appears to have accommodated the requests for extensions of time, repeatedly sought for by the petitioner. On 30.01.2019, the officer pointed to the fact that time had been requested and granted upto 22.12.2018, but despite the grant of time, the required details had not been submitted. An opportunity of personal hearing was granted to the petitioner to appear on 13.02.2019 at 11.30 a.m., failing which orders of assessment would be passed.
6. In reply, the petitioner, by letter dated 12.02.2019, pointed out that a senior member of the family had, on account of the difficulties within the family, committed suicide and there were several issues within the family that had been referred to community Panchayat, pending resolution. They thus solicited 45 days time to submit an effective reply. On 12.03.2019, they sought 15 more days time to submit reply.
7. On 27.03.2019, 30 days time was again sought to submit a reply. Thus, and effectively there had been no response given for the notices issued from 20.08.2018 onwards and the matter had been dragged on till March 2019. While receiving the request dated 27.03.2019, the Assessing Authority has made a categoric note in the letter delivery book to the effect that though time would be granted, it would be limited only till 05.04.2019.
8. This would answer the objections of the learned counsel for the petitioner to the effect that had the officer not intended to grant the time sought for, a specific order should have been passed by him communicating this fact to the petitioner. He relies in this regard upon Circular No.7 dated 03.02.2014.
9. I have perused the relevant portion of the Circular that reads as follows:
3. In the light of the above, the following circular instructions are issued which must be scrupulously followed by assessing officers while passing assessment orders. Joint Comissioners/Deputy Commissioners should verify at random the assessment orders passed by the Assessing Officer while taking up cursory inspe
The determination of tax liability is a mixed question of law and fact that can only be answered by the authority, and the respondent must make this determination within a specified timeframe.
The main legal point established in the judgment is that the continuity of business in the petitioner's hands, despite the demise of the original dealer, validated the assessment orders made in the n....
The court emphasized the importance of registration under the Act and the obligation to disclose all relevant transactions for the determination of taxable turnover.
Non-registration and failure to comply with statutory provisions preclude the benefit of presumptive taxation under Section 6 of the Tamil Nadu Value Added Tax Act, 2006.
Assessment orders quashed as barred by six-year limitation under S.27 TNVAT Act from prior assessments.
The main legal point established in the judgment is the application of the best judgment method due to the petitioner's failure to respond to summons, and the provision for rectification of the order....
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