Tvl.Sri Meenakshi Pipe vs. The Addl. Chief Secretary

Held

The Court held that the impugned order was passed in violation of the principles of natural justice. The Court noted that the petitioner had filed objections along with bill copies for the mismatch. However, the assessing authority found fault with the petitioner for not producing Annexure-II and details of the seller to verify the bills, and also for not producing evidence at the time of inspection. The Court found that it is well-settled that in cases of mismatch, the assessing authority must independently apply its mind and is expected to conduct an intra-departmental enquiry to verify transactions with other dealers. The Court observed that calling for objections without furnishing the necessary materials to the dealer deprives them of an effective defense. Furthermore, rejecting evidence produced after the inspection date, without considering objections and providing an opportunity for personal hearing, violates natural justice. Therefore, the Court set aside the impugned order and remitted the matter back to the second respondent for fresh consideration, directing that a personal hearing be given to the petitioner before passing final orders within two months, following the ratio in Tvl.JKM Graphics Solutions Private Limited v. Commercial Tax Officer and departmental procedures.

Facts

The petitioner, Tvl.Sri Meenakshi Pipe Corporation Firm, a dealer registered under the Tamil Nadu Value Added Tax Act, 2006, filed a writ petition challenging an order dated 15.02.2017 passed by the Assistant Commissioner (CT). The impugned order was passed for the assessment year 2014-15, following a revision notice issued on 15.12.2016. The petitioner had filed objections on 26.12.2016. The dispute arose from a mismatch in accounts concerning Input Tax Credit, which the assessing authority proposed to reverse. The petitioner argued that the order was passed without adhering to principles of natural justice and was without jurisdiction, citing a previous High Court judgment. The revenue contended that the petitioner failed to produce necessary evidence despite opportunities, suggesting an intent to evade tax.

Key Issues

1. Whether the impugned order dated 15.02.2017, passed by the Assistant Commissioner (CT), is contrary to law and violative of the principles of natural justice, specifically concerning the reversal of Input Tax Credit due to alleged mismatch in accounts, and if so, which provision of the TNVAT Act, 2006, is relevant to the assessment process and the requirement of natural justice? Petitioner's Arguments: The petitioner contended that the assessing authority erred by rejecting their objections without independently verifying the transactions or conducting an intra-departmental enquiry. They argued that the authority demanded Annexure-II and details of sellers for verification, which were not provided, and faulted the petitioner for not producing evidence during the inspection itself. This, the petitioner argued, deprived them of an effective opportunity to defend their case and was contrary to the principles of natural justice. They relied on the judgment in Infinite Wholesale Limited v. Assistant Commissioner (CT) and Tvl.JKM Graphics Solutions Private Limited v. Commercial Tax Officer. Respondents' Arguments: The respondents argued that all evidence was available with the dealer, and despite opportunities, they failed to produce the necessary details, deliberately suppressing materials to evade tax. Therefore, the order passed by the assessing authority was justifiable.