M/S.Jay Jay Bricks vs. The Commercial Tax Officer-Iii

Held

The Court held that the impugned assessment order dated 15.06.2015 was liable to be quashed. The Court found that it was an admitted fact that both the petitioner and the end sellers had reported their sales and purchases, and there was no suppression of these transactions. The sole basis for imposing tax on the petitioner was the non-production of original tax invoices. The Court noted that no request was made to the petitioner or the end sellers for these invoices, and both parties belonged to the same tax circle. The Court relied on the Division Bench judgment in Assistant Commissioner (CT) Vs. Infiniti Wholesale Limited, which established that input tax credit cannot be reversed in the hands of the purchasing dealer solely because the selling dealer failed to file returns or pay tax, especially when both parties have reported their transactions. The Court further observed that the respondent had not duly considered these factors and had not provided the petitioner with an opportunity for a personal hearing. Consequently, the matter was remanded back to the respondent for fresh consideration, with directions to provide the petitioner with sufficient opportunity to raise objections and grant a personal hearing within eight weeks.

Facts

The petitioner, M/s. Jay Jay Bricks, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, challenged an assessment order dated 15.06.2015 passed by the respondent, the Commercial Tax Officer-III, Tuticorin. The order demanded a balance tax of Rs. 1,85,508/- for the assessment year 2011-12, citing non-compliance with Section 19(1) of the Act for failure to produce original tax invoices related to purchases from Tvl. PMR Agencies and Tvl. PSS Jeyam & Co. The petitioner argued that both they and the end sellers had reported their sales and purchases, and no request was made for invoices. The petitioner also contended that their objections were not considered and that the respondent violated principles of natural justice by not providing an opportunity for a hearing or considering their reply dated 03.01.2014 and 20.07.2015.

Key Issues

1. Whether the respondent violated the principles of natural justice by passing an assessment order without providing the petitioner an opportunity of being heard and without duly considering the petitioner's reply dated 03.01.2014 and 20.07.2015, particularly in light of Section 27(1)(a) of the Tamil Nadu Value Added Tax Act, 2006? Petitioner's arguments: The petitioner contended that the respondent failed to consider their objections and reply, and did not provide a personal hearing. They argued that both the petitioner and the selling dealers had reported their transactions, and the selling dealers were registered within the same tax circle, implying the respondent could have sought clarification from them. The petitioner relied on the Division Bench judgment in Assistant Commissioner (CT) Vs. Infiniti Wholesale Limited, which held that reversal of input tax credit in the hands of the purchasing dealer is not permissible even if the selling dealer fails to file returns or pay tax. Respondent's arguments: The respondent argued that an alternative efficacious appellate remedy under Section 51 of the Tamil Nadu Value Added Tax Act, 2006, was available. They also contended that the petitioner's objections were duly considered in the impugned assessment order.