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 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. Consequently, the impugned assessment order dated August 10, 2017, was quashed. The matter was remanded back to the respondent for fresh consideration, with directions 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, challenged an assessment order dated August 10, 2017, passed by the respondent, the Commercial Tax Officer. The respondent had issued a pre-revision notice on April 7, 2017, proposing to revise the assessment for the period 2012-2013, citing non-reporting of sales by other end-sellers, purchases from a cancelled 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 cannot be held liable for the non-reporting of sales by other dealers and that the respondent violated principles of natural justice by not affording an adequate opportunity, including a personal hearing.

Key Issues

1. Whether the respondent violated the principles of natural justice by passing the assessment order without affording an adequate opportunity, including a personal hearing, to the petitioner? (Question of law) 2. Whether the petitioner can be held liable for the non-reporting of sales by other end-sellers, especially when the petitioner has duly reported their purchases? (Question of law) Petitioner's arguments: The petitioner argued that the respondent violated the principles of natural justice by not providing an adequate opportunity to present their case, particularly 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). The petitioner further contended that they should not be penalized for the fault of other end-sellers in not reporting sales, as long as the petitioner has reported their purchases. Respondent's arguments: The respondent argued that an alternate statutory appellate remedy was available to the petitioner. They contended that due to suppression by other end-sellers, the input tax credit claimed by the petitioner had to be reversed.