Tvl. City Mobiles vs. The Commissioner Of Commercial

Held

The Court held that the Assessing Officer had violated the principles of natural justice. Firstly, the Court found that the Assessing Officer had not objectively considered the vital objections raised by the petitioner in their reply dated 08.05.2015. The assessment order did not explain how the conclusion of loss was reached, despite the petitioner demonstrating a gross profit. Secondly, the Court noted that no personal hearing was afforded to the petitioner, which is a mandatory requirement, even if not explicitly requested by the petitioner, as per the Division Bench judgment in G.V. Cotton Mills Private Limited vs. Assistant Commissioner(CT), Coimbatore. Therefore, the impugned assessment order dated 31.07.2015 was quashed. The Court directed the second respondent to pass a final order after affording sufficient opportunity to the petitioner to raise all objections and granting them the right of personal hearing within eight weeks.

Facts

The petitioner, M/s. City Mobiles, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, filed a writ petition challenging an assessment order dated 31.07.2015, passed by the Assistant Commissioner (CT). The impugned order for the tax period 2013-14, levied a tax of Rs. 8,83,794/- and a penalty of Rs. 6,61,303/-. The assessment was based on a pre-revision notice dated 06.04.2015, which alleged that the sale value of goods was less than the purchase value, indicating suppression of sales and loss of revenue. The petitioner had responded to the notice on 08.05.2015, providing a detailed reply and calculations demonstrating a gross profit. The assessment order, however, reversed input tax credit and confirmed the tax and penalty.

Key Issues

1. Whether the Assessing Officer erred in reversing the input tax credit under Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, when the petitioner had demonstrated a gross profit and not a sale at a price lesser than the purchase price? 2. Whether the Assessing Officer violated the principles of natural justice by failing to afford the petitioner a reasonable opportunity to show cause and a personal hearing before passing the impugned assessment order, as mandated by Section 24(1) of the Act? Petitioner's Arguments: The petitioner argued that Section 19(20) is not attracted as they made a profit, not a loss on sales. They contended that discounts received from sellers, accounted for as per Rule 10(6)(c), were omitted by the Assessing Officer, leading to an incorrect calculation of gross profit/loss. They also argued that the tax component should not be disturbed as per Rule 10(6)(b)(ii)(c) and that the Assessing Officer took contradictory stands. Furthermore, they claimed no personal hearing was granted. Respondents' Arguments: The respondents argued that an alternative efficacious appellate remedy under Section 51 of the Act was available. They contended that the petitioner's objections were considered and that Section 19(20) was attracted because the sales price was lesser than the purchase price.