M/S.Steel Park vs. The Commercial Tax Officer

Held

The Court held that the respondent violated the principles of natural justice by not affording a personal hearing to the petitioner, which is mandatory as per settled law. The Court noted that the petitioner had provided sufficient reasons for not being able to reply to the pre-revision notice. Furthermore, following the precedents set in The Assistant Commissioner (CT), Koyambedu Assessment Circle, Chennai vs. Infiniti Wholesale Limited and Althaf Shoes (P) Ltd vs. Assistant Commissioner (CT) Valluvarkottam Assessment Circle, Chennai, the Court reiterated that a purchaser cannot be held liable for the fault of other end sellers in not reporting sales, provided the purchaser has reported their purchases. Consequently, the impugned assessment order dated 10.08.2017 was quashed. The matter was remanded back to the respondent for fresh consideration, with a direction to pass final orders in accordance with law after providing the petitioner with an adequate opportunity, including the right of personal hearing, within eight weeks.

Facts

The petitioner, M/s. Steel Park, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, filed a writ petition challenging an assessment order dated 10.08.2017 passed by the respondent, the Commercial Tax Officer, Nanguneri Assessment Circle. The assessment order revised the earlier accepted assessment for the period 2013-2014. The respondent had issued a pre-revision notice on 07.04.2017, citing reasons such as non-reporting of sales by other end sellers, purchases from a cancelled registration certificate dealer, and purchases exceeding reported sales. The petitioner contended that they could not reply to the pre-revision notice due to a partner's severe illness. They argued that they are not liable for the non-reporting of sales by other end sellers and that the respondent violated principles of natural justice by not affording an adequate opportunity, including a personal hearing.

Key Issues

1. Whether the assessment order dated 10.08.2017, passed by the respondent, is liable to be quashed for violating the principles of natural justice by not affording adequate opportunity, including a personal hearing, to the petitioner? (Under Article 226 of the Constitution of India and principles of natural justice). 2. Whether the petitioner, as a purchaser, can be held liable for the non-reporting of sales by other end sellers? (Under Section 27 of the TNVAT Act, 2006, and relevant case law). Petitioner's Arguments: - The respondent violated the principles of natural justice by not providing an adequate opportunity, including a personal hearing, before passing the impugned assessment order. - The petitioner cannot be penalized for the fault of other end sellers in not reporting sales. - Relied on decisions in M/s.JKM Graphics Solutions Private Limited vs. Commercial Tax Officer, Vepery Assessment Circle Chennai, (2017) 99 VST 343 (Mad); The Assistant Commissioner (CT), Koyambedu Assessment Circle, Chennai vs. Infiniti Wholesale Limited, (2017) 99 VST 430; and Althaf Shoes (P) Ltd vs. Assistant Commissioner (CT) Valluvarkottam Assessment Circle, Chennai, (2012) 50 VST 179. Respondent's Arguments: - An alternate appellate statutory remedy is available to the petitioner. - Due to suppression by other end sellers, the input tax credit claimed by the petitioner had to be reversed.