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. It was admitted that both the petitioner (purchaser) and the other end seller (Tvl. PMR Agencies) had reported their sales and purchases, indicating no suppression. The tax was imposed solely on the ground that original tax invoices were not produced, despite no request being made for them. The Court noted that both parties belonged to the same tax circle. Citing the Division Bench judgment in Assistant Commissioner (CT) Vs. Infiniti Wholesale Limited, the Court reiterated that reversal of input tax credit is not permissible for the purchasing dealer even if the selling dealer defaults. The Court found that these crucial factors were not duly considered by the respondent in the assessment order, and importantly, no personal hearing was granted to the petitioner. Therefore, the principles of natural justice were violated. The Court quashed the assessment order and remanded the matter back to the respondent for fresh consideration, directing that the petitioner be given sufficient opportunity to raise objections and be granted 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 Commercial Tax Officer-III, Tuticorin. The order demanded a balance tax of Rs. 3,07,370/- for the assessment year 2012-13, citing non-compliance with Section 19(1) of the Act for failure to produce the original tax invoice relating to purchases made by the other end seller, Tvl. PMR Agencies. The petitioner contended that both parties had reported their respective sales and purchases, and no request was made to produce invoices. The petitioner also argued that the respondent did not consider their replies dated 03.01.2014 and 20.07.2015, which included Annexure-II for purchases by the other end seller and stated no input tax credit was claimed.

Key Issues

1. Whether the impugned assessment order, dated 15.06.2015, passed by the respondent is illegal and contrary to Section 27(1)(a) of the Tamil Nadu Value Added Tax Act, 2006, for violating the principles of natural justice by failing to consider the petitioner's objections and provide an opportunity of being heard? (Mixed question of law and fact). Petitioner's arguments: The petitioner argued that the respondent failed to consider their replies dated 03.01.2014 and 20.07.2015, which provided relevant documentation and stated no input tax credit was claimed. They relied on the Division Bench judgment in Assistant Commissioner (CT) Vs. Infiniti Wholesale Limited, holding 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. The petitioner contended that since both parties reported sales and purchases, the situation was even more favorable. They asserted a violation of natural justice. 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.