M/S.M.S.Marketing, Rep. By Its vs. The Deputy Commercial Tax

Held

The Court held that the impugned assessment order dated 28.08.2017 was passed without affording the petitioner an adequate opportunity to raise objections and without providing a personal hearing, thereby violating the principles of natural justice. The Court noted that while the respondent produced a pre-revision notice dated 07.07.2017, the signature on it could not be confirmed as that of the petitioner's authorized representative, and it was significantly different from the petitioner's signature on the affidavit. The Court found that the assessment was based on a web report showing a mismatch in sales/purchases. The Court agreed with the petitioner's reliance on the cited judgments, particularly regarding the necessity of affording proper opportunity and the principle that input tax credit cannot be denied solely due to the other end seller's default if the dealer has paid tax on purchases. Consequently, the assessment order and the demand notice were quashed, and the matter was remanded back to the respondent for fresh consideration, with directions to provide adequate opportunity, allow the petitioner to file a reply, and grant a personal hearing within eight weeks.

Facts

The petitioner, M/s. M.S. Marketing, a registered dealer under the TN VAT Act, 2006, challenged an assessment order dated 28.08.2017, which was intimated by a letter dated 24.12.2018. The petitioner contended that the respondent, the Deputy Commercial Tax Officer, revised the assessment for the year 2014-15 under Section 27(4) of the TN VAT Act, 2006, based on a web report, without providing adequate notice or an opportunity for a personal hearing. The petitioner argued that the assessment order was passed without affording her the chance to raise objections. The respondent, however, claimed that a pre-revision notice was issued on 07.07.2017 and was served on the petitioner's authorized representative, and that an alternative statutory remedy existed under Section 51 of the TN VAT Act, 2006.

Key Issues

1. Whether the impugned assessment order dated 28.08.2017 passed by the respondent under Section 27(4) of the TN VAT Act, 2006, is liable to be quashed for violation of the principles of natural justice, specifically for not affording adequate opportunity, including a personal hearing, to the petitioner? (Petitioner's contention: The respondent passed the assessment order based solely on a web report without issuing proper notice or providing a personal hearing, thus violating principles of natural justice and relying on judgments like M/s.JKM Solutions Private Limited and Infiniti Wholesale Ltd. Revenue's contention: A pre-revision notice was issued on 07.07.2017 and served on the petitioner's authorized representative as per Rule 19 of the TN VAT Rules, 2007, and an alternate remedy under Section 51 of the TN VAT Act, 2006, was available, making the writ petition not maintainable.) 2. Whether the respondent has the power to revoke input tax credit on the ground that the other end seller has not paid tax, even if the dealer has established payment of tax for all purchases? (Petitioner's contention: Relied on the judgment in Infiniti Wholesale Ltd., stating that if the dealer establishes payment of tax for purchases, input tax credit cannot be revoked solely because the other end seller defaulted.)