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 in violation of the principles of natural justice. While the respondent produced a pre-revision notice dated 07.07.2017, the Court found that the signature on this notice, allegedly obtained from the petitioner's authorized representative, was significantly different from the petitioner's signature on the affidavit. This raised doubts about the proper service of the notice. Furthermore, the Court noted that no personal hearing was afforded to the petitioner before the assessment order was passed. The Court agreed with the petitioner's contention that the assessment was based solely on a web report showing a mismatch, and that the judgments relied upon by the petitioner were squarely applicable. The Court found that adequate opportunity was not granted to the petitioner to raise objections. Consequently, the assessment order and the consequential demand letter were quashed. The matter was remanded back to the respondent for fresh consideration, with directions to afford the petitioner adequate opportunity to raise objections, file a reply, and grant a personal hearing, with final orders to be passed within eight weeks.

Facts

The petitioner, M/s. M.S. Marketing, a registered dealer under the Tamil Nadu Value Added Tax (TN VAT) Act, 2006, filed a writ petition challenging an assessment order dated 28.08.2017 passed by the respondent, the Deputy Commercial Tax Officer. This order was intimated to the petitioner via a letter dated 24.12.2018. The petitioner contended that the assessment for the year 2013-14 was revised under Section 27(4) of the TN VAT Act based solely on a web report, without providing adequate notice or an opportunity for a personal hearing. The respondent argued that a pre-revision notice was issued on 07.07.2017 and properly served on the petitioner's authorized representative, and that an alternate statutory remedy existed under Section 51 of the TN VAT Act.

Key Issues

1. Whether the respondent violated the principles of natural justice by passing the assessment order dated 28.08.2017 without affording the petitioner an adequate opportunity to raise objections and a personal hearing, contrary to Section 27(4) of the TN VAT Act, 2006? Petitioner's arguments: The petitioner argued that no adequate opportunity was provided, and the assessment was based solely on a web report. They relied on the judgment in M/s.JKM Solutions Private Limited, which outlines guidelines for mismatches in sales/purchases, and the judgment in Assistant Commissioner (CT) Koyambedu Assessment Circle Chennai vs. Infiniti Wholesale Ltd., stating that input tax credit cannot be revoked if the dealer proves tax payment on purchases, even if the other end seller defaulted. Respondent's arguments: The respondent contended that a pre-revision notice was issued and properly served on the petitioner's authorized representative as per Rule 19 of the TN VAT Rules, 2007, thus granting adequate opportunity. They also argued that the writ petition was not maintainable as an alternate efficacious remedy under Section 51 of the TN VAT Act was available.