M/S.Naveen Electricals And vs. The Commercial Tax Officer

Held

The Court held that the respondent's order was not fair or sustainable. It found that the petitioner had given an undertaking to produce original invoices with their objections, and it is well-settled that a personal hearing must be afforded before deciding an issue. The Court noted that if the respondent had called for the invoices as promised by the petitioner, they would have been produced, allowing for a decision based on material evidence. The Court also observed that the purchase difference was arrived at based on a web report, making verification of defects after providing material documents during a personal hearing essential. The Court stated that a statement obtained from the petitioner does not automatically amount to an admission of defects, and any collection of tax via cheque might have been under compulsion. The Court concluded that the assessing authority appeared to have treated the Enforcement Wing's report as conclusive, which is not proper. Consequently, the impugned order was set aside, and the matter was remanded back to the respondent for fresh consideration, with directions for the petitioner to produce original invoices and for the respondent to provide a personal hearing and pass orders on merits, uninfluenced by the Enforcement Wing's report.

Facts

The petitioner, M/s. Naveen Electricals & Hardwares, a dealer under the Tamil Nadu Value Added Tax Act, 2006, filed returns for the period 2016-17. Following a surprise inspection by Enforcement Wing officials on January 21-22, 2016, which revealed certain defects, the respondent Commercial Tax Officer issued a pre-revision notice on November 10, 2017. The petitioner replied on December 28, 2017. The respondent then passed an order on February 27, 2018, confirming the proposals, which the petitioner challenged via a writ petition. The dispute centers on the disallowance of Input Tax Credit reversals due to the non-production of original invoices.

Key Issues

1. Whether the respondent's order dated 27.02.2018, which confirmed the proposals without affording a personal hearing and without verifying the original invoices, is arbitrary, illegal, and without jurisdiction, thereby warranting quashing and a fresh adjudication? (Question of law and mixed fact and law, turning on principles of natural justice and procedural fairness under the TNVAT Act). Petitioner's arguments: The petitioner contended that they had clearly stated in their objections their readiness to produce original invoices for verification, as these could not be sent with the objections. They argued that a statement given to Enforcement Wing officials does not constitute an admission, and any tax payment made was not voluntary. They sought a fresh order after a personal hearing. Respondent's arguments: The respondent argued that the petitioner failed to produce the original invoices at the time of inspection or with their objections, indicating tax evasion and wrongful claims of Input Tax Credit. They contended that the order passed was sustainable in law.