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

Held

The Court held that the respondent had violated the principles of natural justice by not affording a personal hearing to the petitioner, which is mandatory as per settled law. The Court also noted that the petitioner had provided sufficient reasons for not replying to the pre-revision notice. Furthermore, relying on the judgments in The Assistant Commissioner (CT) vs. Infiniti Wholesale Limited and Althaf Shoes (P) Ltd vs. Assistant Commissioner (CT), the Court held that it is settled law 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. The Court found that the impugned assessment order was not passed in light of the principles laid down in the cited judgments. Consequently, the assessment order was quashed, and the matter was remanded back to the respondent for fresh consideration, with a direction to provide the petitioner with adequate opportunity, including a personal hearing, to raise all objections.

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. The respondent had proposed to revise the assessment for the period 2014-2015 based on non-reporting of sales by other end sellers, purchases from a cancelled dealer, and purchases exceeding reported sales. The petitioner contended that they were unable to reply to the pre-revision notice due to a partner's severe illness. They argued that they should not be held liable for the non-reporting of sales by other dealers and that the principles of natural justice were violated by not affording an adequate opportunity, including a personal hearing.

Key Issues

1. Whether the respondent violated the principles of natural justice by not affording an adequate opportunity, including a personal hearing, to the petitioner before passing the impugned assessment order, contrary to settled law? 2. Whether the petitioner can be held liable for the non-reporting of sales by other end sellers, thereby affecting their input tax credit claim? Petitioner's Arguments: - The petitioner argued that the respondent violated the principles of natural justice by not providing an adequate opportunity to raise objections and by failing to grant a personal hearing, which is mandatory. They relied on the judgments in M/s.JKM Graphics Solutions Private Limited vs. Commercial Tax Officer, The Assistant Commissioner (CT) vs. Infiniti Wholesale Limited, and Althaf Shoes (P) Ltd vs. Assistant Commissioner (CT). - They further contended that they should not be penalized for the fault of other end sellers in not reporting sales, as they had duly reported their purchases. Respondent's Arguments: - The respondent argued that an alternate appellate statutory remedy was available to the petitioner. - They contended that due to suppression of sales by other end sellers, the input tax credit claimed by the petitioner had to be reversed.