Kakumanu Chenchu Narayana vs. The Deputy Commercial Tax Officer - I

Held

The Court directed the 1st respondent to furnish a copy of the show cause notice to the petitioner within one week of receiving the order. Upon receipt, the petitioner was granted two weeks to submit their explanation or objections. The 1st respondent was then directed to consider these objections, potentially by offering a personal hearing, and pass an appropriate order within six weeks from the date of receiving the petitioner's reply. Crucially, the Court ordered that no coercive steps would be taken against the petitioner pursuant to the demand notices dated March 27, 2023, and July 7, 2023, and the garnishee notice dated August 8, 2023, until the entire exercise was completed. The ratio decidendi is that a taxpayer must be provided with a copy of the show cause notice to enable them to file a proper reply, and principles of natural justice necessitate this opportunity before coercive measures are initiated.

Facts

The petitioner, a taxpayer, filed a writ petition under Article 226 of the Constitution of India seeking a mandamus to declare the actions of the 1st respondent (revenue authority) in issuing demand notices dated March 27, 2023, and July 7, 2023, and a garnishee notice dated August 8, 2023, as illegal. These notices pertained to the tax periods of April 2013 to June 2017 (VAT) and demanded a total of Rs. 2,13,78,683/- (tax and penalty). The garnishee notice was directed to the petitioner's tenants (5th and 6th respondents) to pay the demanded amount from monthly rents. The petitioner's primary grievance was the non-furnishing of a certified copy of the show cause notice, which prevented them from filing a reply. The petitioner also sought a direction to restrain coercive steps.

Key Issues

1. Whether the action of the 1st respondent in issuing demand and garnishee notices without providing a certified copy of the show cause notice to the petitioner is illegal, arbitrary, and contrary to constitutional provisions (Articles 14, 19(1)(g), 21, 265, and 300-A)? Petitioner's arguments: The petitioner contended that the non-furnishing of the show cause notice copy prevented them from filing a proper reply and rebutting the revenue's contentions. This lack of opportunity to be heard rendered the subsequent demand and garnishee notices illegal and arbitrary. They sought a direction to furnish the show cause notice copy and to stay coercive steps. Revenue's arguments: The learned Government Pleader fairly submitted that a copy of the show cause notice would be furnished to the petitioner.