Tvl.New Bombay Stores vs. The Commissioner Of Commercial

Held

The Court held that the writ petitions are maintainable. It rejected the respondents' argument regarding the alternative remedy, stating that where impugned orders contain errors apparent on the face of the record and violate principles of natural justice, the assessee is justified in approaching the High Court under Article 226. On the merits, the Court found the assessments to be unsustainable. It noted a discrepancy in the inspection report regarding the recovery of records. The Court emphasized that while an estimated assessment is permissible when accounts are not maintained, the estimation must be based on a realistic and acceptable methodology. The Court found the reliance on a single day's sales figure (Rs. 11,000) as the basis for estimating turnover for eight years (2007-08 to 2014-15) to be arbitrary and mechanical. It cited precedents (State of Tamilnadu Vs. New Kamaliya Hotel, Swadeshi Udyog Vs. Trade Tax Officer, Chilton Refrigeration Vs. State of Kerala) stating that estimating turnover based on one day's sales is not a scientific method and that materials found during inspection should relate to the specific assessment period. The Court concluded that the per-diem amounts were determined mechanically and without proper basis for each year. Therefore, the impugned orders were set aside on merits.

Facts

The petitioner, Tvl. New Bombay Stores, is an unregistered dealer of tobacco products and general goods in Thanjavur District. The petitioner claims its turnover was below the registration threshold and is exempt under GST. Following an inspection on December 13, 2014, a statement was recorded from the petitioner, allegedly under coercion, indicating daily sales of Rs. 11,000. The petitioner was not provided with a copy of the inspection report or statement. Pre-assessment notices were issued on June 15, 2015, proposing estimated annual sales turnover for eight years (2007-08 to 2014-15) based on daily sales figures ranging from Rs. 10,000 to Rs. 17,000. The petitioner contended it could not raise objections due to non-receipt of inspection documents, leading to the impugned assessment orders. The petitioner also noted discrepancies between pre-assessment notices and final orders, and reliance on the coerced statement.

Key Issues

1. Whether the writ petitions are maintainable despite the existence of an alternative statutory remedy, considering alleged errors apparent on the face of the record and violation of principles of natural justice? 2. Whether the assessments made for the periods 2007-08 to 2014-15 are valid, particularly concerning the methodology adopted for estimating the turnover based on a single day's sales figure and reliance on a statement allegedly recorded under coercion, without providing necessary documents to the petitioner? Petitioner's Arguments: The petitioner argued that the writ petitions are maintainable because the impugned orders suffer from fundamental flaws and violations of natural justice. They contended that the assessments were arbitrary, relying on a coerced statement and a single day's sales figure, which was not scientifically determined and was applied mechanically across eight years. The petitioner also highlighted the non-furnishing of inspection reports and statements as a violation of natural justice, preventing them from effectively challenging the proposed assessments. They relied on the principles that where errors are apparent and go to the root of the matter, writ jurisdiction is appropriate. Respondents' Arguments: The respondents argued that the writ petitions are not maintainable as the petitioner has an efficacious alternative statutory remedy. They asserted that discrepancies and violations were found during the inspection, which the assessee admitted. They claimed that no objections were filed by the assessee to the pre-assessment notices, despite extensions, and that the estimated per-diem rate was proper due to the lack of maintained accounts. They submitted that the petitions should be dismissed on these grounds.