Tvl.A.M.T.R.Sivanesa Nadar &Co vs. The State Tax Officer-3

Held

The Court held that the assessing authority committed a procedural error by treating the inspection report as gospel truth without independently evaluating the petitioner's objections and the submitted partnership deed. The Court noted that the GST registration clearly indicated the firm's constitution as a partnership. It was emphasized that inspection reports cannot be taken at face value, and the assessing authority has a duty to verify statements and documents. The Court found that the assessing authority failed to apply its mind to the documents produced by the petitioner and relied solely on statements made during inspection, which cannot be treated as voluntary. Consequently, the orders passed by the respondent were set aside. The Court remanded the matters back to the respondent for fresh consideration, directing them to consider the petitioner's objections, afford a personal hearing, and pass orders on merits within one month.

Facts

The petitioner, Tvl.A.M.T.R.Sivanesa Nadar & Co., a partnership firm registered under the TNVAT Act, filed writ petitions challenging orders dated 07.06.2018 passed by the State Tax Officer-3. These orders confirmed proposals to reverse Input Tax Credit (ITC) for the periods 2006-07 to 2013-14. The challenge arose from an inspection on 20.04.2014, where it was noted that two partners had expired and one had retired in 2004, leading to the belief that the firm had changed into a proprietorship. The petitioner submitted objections, including the partnership deed, asserting it remained a partnership. However, the assessing authority confirmed the proposals based on a sworn statement given to Enforcement Wing officials.

Key Issues

1. Whether the assessing authority erred in treating the petitioner firm as a proprietorship and reversing Input Tax Credit without properly considering the petitioner's objections and submitted documents, thereby violating principles of natural justice, as argued by the petitioner? The petitioner contended that the firm continued as a partnership with two active partners, evidenced by its GST registration and partnership deed, and that the assessing authority failed to independently evaluate the inspection report and the objections. The respondent (State Tax Officer) did not record any specific arguments in the judgment, but their action implied reliance on the inspection report and the sworn statement. The core issue revolves around the proper determination of the firm's constitution and the procedural fairness in the assessment.