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2022 Supreme(Mad) 2829
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
M. NIRMAL KUMAR, J.
Rama Vilas Tobacco Company, Represented by its Managing Partner, N. Indirajith, Thanjavur - Appellant
Versus
The Joint Commissioner of Commercial Taxes, Trichy & Another - Respondent
W.P(MD). No. 18451 of 2022 & W.M.P(MD)Nos. 13451 & 13452 of 2022
Decided On : 16-08-2022
For the Petitioner:S. Ramesh, Advocate. For the Respondents:C. Satheesh, Government Advocate.
The main legal point established in the judgment is the importance of adhering to the legal provisions under the Tamil Nadu Value Added Tax Act, 2006, particularly in relation to tax exemptions and the proper consideration of rectification and revision petitions before taking coercive actions.
Headnote:
VAT - Tax Exemption for Chewing Tobacco - Tamil Nadu Value Added Tax Act, 2006 - Notification No.II(1)/CTR/52(a)/2007-G.O.No.146, dated 08.08.2007; G.O.Ms.No.149, dated 12.10.2009; G.O.Ms.No.149, dated 12.10.2009 - Chewing tobacco was exempted from tax from 01.04.2007 to 12.10.2009. Court quashed the demand of tax for chewing tobacco on multiple occasions. The deduction of Rs.2,05,000/- from the petitioner’s State Bank account on 25.05.2022 was deemed improper and ordered to be re-credited to the petitioner’s account. The Commissioner of Commercial Taxes, Trichy was directed to consider and dispose of the R.P.Nos.5 and 40 of 2010 within three months from the date of receipt of the order, and the Assessing Officer to conclude the rectification proceedings by then. No coercive action to be taken against the petitioner in the meantime.
Fact of the Case:
The petitioner, a tobacco products manufacturer, challenged the imposition of VAT on chewing tobacco by the second respondent. The petitioner claimed that there was an exemption for tobacco products listed under the Tamil Nadu Value Added Tax Act, and the second respondent failed to serve prior notice before attaching the petitioner’s bank account.
Finding of the Court:
The Court found that chewing tobacco was exempted from tax from 01.04.2007 to 12.10.2009 and that the deduction of Rs.2,05,000/- from the petitioner’s State Bank account was improper. The Court directed the Commissioner of Commercial Taxes, Trichy to consider and dispose of the pending revision petitions within three months and the Assessing Officer to conclude the rectification proceedings. No coercive action was to be taken against the petitioner in the meantime.
Issues: Imposition of VAT on chewing tobacco, failure to serve prior notice before attaching the petitioner’s bank account, pending revision petitions, and rectification proceedings.
Ratio Decidendi: The Court's decision was influenced by the legal provisions under the Tamil Nadu Value Added Tax Act, 2006, specifically the notifications exempting chewing tobacco from tax during a certain period. The Court emphasized the need for proper consideration of rectification petitions and pending revision petitions before taking coercive actions against the petitioner.
Final Decision: The writ petition was disposed of, and no costs were imposed. The connected miscellaneous petitions were closed.
JUDGMENT
(Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorarified Mandamus, to call for the records relating to the proceedings of the second respondent in the Letter No.N.a.2421/2019/A6, dated 14.03.2022 and quash the same as arbitrary illegal, incompetent and without jurisdiction and forbear the respondents from levying and collecting VAT from the petitioner and further direct the second respondent to refund the sum of Rs.2,05,000/-, which was wrongfully recovered by the second respondent from the petitioner without any valid reason being given to justify the same.)
1. The petitioner has filed this writ petition to quash the impugned order, dated 14.03.2022.
2. The contention of the petitioner is that the petitioner is in the business of manufacture of tobacco products and the sale of raw chewing tobacco from the year 1945. Chewing tobacco is made from different dried parts of the tobacco plant. The petitioner filed their monthly returns with the second respondent in the year 2008. On 30.09.2009, in its proceedings in R.C. 2116/07, B1, the second respondent wrongly classified chewing tobacco under Entry 69 of part C of the First Schedule to the Tamil Nadu Value Added Tax, 2006 and imposed a tax of 12.5% under the said entry.
3. As per Notification No.II(1)/CTR/52(a)/2007-G.O.No.146, dated 08.08.2007, which had been in effect from 01.04.2007, snuff and cheroot were exempted from levy of tax. This notification was subsequently amended by G.O.Ms.No.149, dated 12.10.2009, which exempted from levy of tax on chewing tobacco as well. This notification was subsequently cancelled on 12.07.2011, by Notification No.II(1)/CTR/12(R-1)/2011-G.O.No.75, dated 11.07.2011. Consequently, during the period between 01.04.2007 and 12.07.2011, there was exemption for tobacco products listed under the Tamil Nadu Value Added Tax Act, 2006. This being so, the second respondent issued an order on 13.09.2009, in the proceedings in R.C.2116/07, B1, directing the petitioner to pay the tax at the rate of 12.5% on the entire sale value of chewing tobacco, which amounts to Rs.14,51,460/-.
4. The Tamil Nadu Scented and Chewing Tobacco Manufacturer's Organization filed a writ petition in W.P.No.21237 of 2011 before this Court to quash the proceedings of the Assistant Commissioner in that matter and to restrain and injunct them from levying and collecting value added tax on chewing tobacco from the members of the petitioners for the sale effected from 01.04.2007 till 12.10.2009. Subsequent to the said order, dated 30.09.2009, the petitioner preferred revision petitions before the Joint Commissioner of Commercial Taxes, Trichy in TNVAT No.33743820078 for the assessment years 2007-2008 and 2008-2009 for the levy of taxes amounting to Rs.14,51,460/- on a reported turnover of Rs.1,16,11,680/- and Rs.14,17,625/- for both assessment years respectively. The revision petitions are admitted in R.P.Nos.5 and 40 of 2010.
5. The petitioner filed a rectification petition under Section 84 of the Tamil Nadu Value Added Tax before the Assessing Officer on 15.07.2021. The Assessment Officer failed to consider the rectification petition as well and proceeded to issue a demand notice, dated 14.03.2022 for payment of taxes. The Assessing Officer without intimation to the petitioner proceeded to serve an attachment notice upon the petitioner's bank account in State Bank of India, Thanjavur, after the Department recovered Rs.2,05,000/- from the bank account of the petitioner. The petitioner further submits that this Court in W.P(MD)No.18510 of 2021 quashed the impugned order, which is similar to the present case. He further submits that there was an exemption in favour of tobacco products listed under Tamil Nadu Value Added Tax Act. Further, the second respondent ought to have served prior notice before the attachment of petitioner’s bank account. Hence, filed this writ petition.
6. The learned Government Advocate fo
