Sri Laxmi Timbers PVT LTD vs. State Tax Officer

Held

The Court held that the petitioner's contention of violation of principles of natural justice was untenable. It found that the Revenue had provided several opportunities for hearing and submission of documents, which the petitioner either failed to utilize properly or sought extensions, thereby prolonging the assessment process. The Court noted that the petitioner's request for one more personal hearing after submitting a reply on December 17, 2020, was an attempt to unduly extend the opportunity, which is not a recognized procedure. Regarding the second ground, the Court found that the introduction of Sri MRP Enterprises was not a new introduction beyond the scope of the show cause notice. The Court reasoned that the purchase from Sri Sivasakthi Trade Mart and its subsequent sale to Sri MRP Enterprises were part of the same alleged bogus transaction intended to be investigated. Both entities being in the same locality and the transaction forming the basis of the alleged ITC claim meant the assessment officer was pointing out the buyer to establish the bogus transaction, which was within the scope of the show cause notice. Therefore, the Court concluded that the petitioner could not successfully challenge the impugned orders in writ petitions and should instead pursue the appellate remedy.

Facts

The petitioner, M/s. Sril Laxmi Timbers Pvt Ltd, filed two writ petitions challenging assessment orders dated December 31, 2020, passed by the State Tax Officer (Collection and Arrear), Tirunelveli, for the tax periods 2017-2018 and 2018-2019. The challenge also extended to consequent recovery notices dated April 15, 2021. The petitioner argued a violation of natural justice due to insufficient opportunity to reply and produce documents, and that the assessment orders went beyond the scope of the show cause notice. The Revenue contended that multiple opportunities were provided and utilized by the petitioner, and that the assessment order did not travel beyond the show cause notice. The dispute involves the admissibility of Input Tax Credit (ITC) claimed by the petitioner.

Key Issues

1. Whether the petitioner was denied a reasonable opportunity of hearing and to produce documents, thereby violating the principles of natural justice, in contravention of Article 226 of the Constitution of India? 2. Whether the impugned assessment orders, by introducing a new supplier (Sri MRP Enterprises, Pondicherry) not mentioned in the show cause notice, travelled beyond the scope of the show cause notice, thereby vitiating the assessment process under Section 73 of the CGST Act? Petitioner's Arguments: The petitioner contended that despite requests for more time to produce crucial documents from suppliers and dealers, and a reply dated December 17, 2020, received by the Revenue on December 29, 2020, the assessment orders were passed on December 31, 2020, indicating a lack of fair opportunity. Furthermore, the petitioner argued that the show cause notice, dated October 27, 2020 and November 2, 2020, focused on purchases from Sri Sivasakthi Trade Mart, Cauvery Saw Mill, and Greenwood Trading Company. However, the impugned order introduced Sri MRP Enterprises, Pondicherry, as a supplier, which was not part of the original show cause notice, thus exceeding its scope. Revenue's Arguments: The Revenue argued that numerous opportunities, including summons, show cause notices, and final hearing notices, were issued. The petitioner either failed to attend or sought extensions, not properly utilizing the given opportunities. The Revenue asserted that the mention of Sri MRP Enterprises was not a new introduction but was intrinsically linked to the alleged bogus transaction originating from Sri Sivasakthi Trade Mart, as both entities were located in the same vicinity, and the purchase and sale were part of the same alleged fraudulent scheme. Therefore, the assessment order did not go beyond the scope of the show cause notice.