Tvl. Veera Agencies vs. The Assistant Commissioner (St)

Held

The Court held that the petitioner had an effective appellate remedy. A perusal of the impugned orders indicated that notices and reminders for personal hearing were issued, and the petitioner had neither filed an online nor a manual reply. Despite several opportunities, the petitioner failed to avail the afforded personal hearing and did not prove compliance with Section 16(2) of the Act for claiming ITC from M/s. Star Agencies. The Court noted that the impugned orders identified fake invoices through which ITC was passed on, and that enquiries revealed M/s. Star Agencies' address was a residential building where no business was conducted, with the proprietor having vacated the premises a year prior. The Court found the petitioner's arguments to be purely factual and not suitable for consideration in a writ petition. Therefore, the writ petitions were dismissed. The Court directed the petitioner to file an appeal before the Deputy Commissioner (St) and granted the Appellate Authority permission to receive the appeal and condone the delay, provided the appeal was filed within two weeks of receiving the order. No costs were imposed.

Facts

The petitioner, TVL.Veera Agencies, filed two writ petitions challenging assessment orders dated January 31, 2023, and February 8, 2023, passed by the Assistant Commissioner (St), Pudukkottai. These orders pertained to the tax periods 2019-20 and 2020-21, respectively. The petitioner, dealing in lamps, light fittings, and related services, had transactions with a supplier, Star Agencies. Following an inspection of Star Agencies on January 5, 2022, where records were confiscated, the respondent issued an intimation on July 29, 2022, alleging non-existent trading and bill trading by the petitioner, based on claims of Input Tax Credit (ITC) without original sale transactions. The petitioner submitted a reply on January 27, 2023, requesting a personal hearing and copies of documents, but the impugned orders were passed without considering this reply, which the petitioner claims violates principles of natural justice. The disputed amounts for 2019-20 were Rs. 30,08,364.92 (CGST) and Rs. 30,08,364.92 (SGST), and for 2020-21 were Rs. 18,97,851.63 (CGST) and Rs. 18,97,851.63 (SGST), along with interest and penalty.

Key Issues

1. Whether the assessment orders passed by the respondent are illegal and devoid of merits for violating the principles of natural justice by failing to consider the petitioner's reply and provide a personal hearing, as argued by the petitioner? 2. Whether the petitioner has correctly availed Input Tax Credit (ITC) in accordance with Section 16(2)(b) of the GST Act, or whether the transactions with Star Agencies were non-existent and constituted bill trading, as contended by the respondent? Petitioner's arguments: The petitioner contended that the impugned orders were passed without considering their reply dated January 27, 2023, which included a request for a personal hearing and copies of documents. They argued that the assessment was based on documents seized from a third party, and that the third party had accounted for transactions and paid taxes. The petitioner also asserted that the rejection of ITC was based solely on the inspection of the seller's premises, which was found closed, and that the enquiry report was not provided. They claimed the respondent had not given them an opportunity to present their case. Respondent's arguments: The respondent argued that the petitioner was granted multiple opportunities, which were not availed properly. They contended that the petitioner's objections were considered, and that the seller's premises were found locked and used as a residence, with no business activities taking place, indicating transactions were only on paper. The respondent also raised the issue of an effective alternative remedy.