M/S.Anantham Retail Private Limited vs. State Tax Officer

Facts

The petitioner, M/s.Anantham Retail Private Limited, filed three writ petitions challenging assessment orders dated January 31, 2022, for the assessment years 2019-20, 2020-21, and 2021-22. The total disputed liability amounted to Rs. 2,06,48,214/-, Rs. 2,46,59,465/-, and Rs. 4,46,77,601/- respectively. The State Tax Department conducted an inspection of the petitioner's showrooms from September 14 to 16, 2021, under Section 67 of the TNGST Act, identifying certain irregularities. Subsequently, the respondent issued communications in Form DRC-01A on December 6, 2021, detailing tax liabilities and non-maintenance of accounts. The petitioner requested time to respond and later submitted that the proposed liabilities were not agreeable on facts and law, alleging procedural improprieties and violation of natural justice.

Held

The Court held that the assessment orders passed by the respondent were in violation of the principles of natural justice. Specifically, the Court found that the respondent failed to issue a proper show cause notice under Section 73 or 74 of the TNGST Act after the petitioner raised objections to the liability proposed in Form DRC-01A. The Court noted that while a communication in Form DRC-01A was issued, a subsequent show cause notice, followed by an opportunity to file objections and a personal hearing, should have preceded the final assessment order. The Court also found the consequential recovery notice issued to Axis Bank to be improper. Therefore, the assessment orders and the recovery notice were quashed. The respondent was directed to issue a fresh notice, follow the prescribed procedures under the TNGST Act, including issuing a show cause notice, providing an opportunity for objections, and then passing appropriate orders on merits and in accordance with law. The Court did not decide on the merits of the tax liability itself, focusing solely on the procedural infirmities.

Key Issues

1. Whether the assessment orders passed by the respondent are vitiated by a violation of the principles of natural justice, specifically concerning the issuance of a show cause notice under Section 73 or 74 of the TNGST/CGST Act prior to passing the assessment order? Petitioner's Arguments: The petitioner contended that the respondent failed to issue a proper show cause notice as envisaged under Section 73 or 74 of the TNGST/CGST Act before passing the assessment orders. They argued that the proceedings were perverse, and information was collected under inducement, violating natural justice. The petitioner also claimed that the demand in Form DRC-01A should be rejected. They relied on various High Court judgments, including Mahindra and Mahindra Ltd. vs. The Joint Commissioner (CT) Appeals and M/s.NKAS Services Private Limited, Kolkata vs. The State of Jharkhand. Revenue's Arguments: The respondent argued that the burden of proof lies with the dealer and that they had properly served notice and provided opportunities for personal hearing. They contended that the petitioner's objections were not convincing and that the orders were passed in accordance with law and without deviating from the principles of natural justice. They relied on the provisions of the TNGST Act, 2017.