Nowfal Traders vs. The Commercial Tax Officer

Held

The Court held that it is a well-settled principle that when tax authorities obtain details from a website, they must provide copies of such information and call for objections from the assessee. In cases of mismatch, the Assessing Authority is required to independently apply their mind, frame proposals, and verify details through an intra-departmental inquiry. It is mandatory for the Assessing Authority to provide a personal hearing before passing a final order. The Court found that the respondent had passed the impugned order without adhering to these settled procedures, despite instructions and reiterations by this Court in various judgments. Consequently, the order passed by the respondent was found to be unsustainable in law. The Court set aside the impugned order and remanded the matter back to the respondent for fresh consideration. The respondent was directed to conduct an inquiry into the mismatch, send a revised proposal to the petitioner seeking objections, and after affording an opportunity of personal hearing, pass orders on merits and in accordance with law within six weeks.

Facts

The petitioner, Tvl.Nowfal Traders, a registered dealer under the TNVAT Act, filed a return for the year 2013-14. Upon scrutiny, the respondent, the Commercial Tax Officer, found a wrong claim of input tax credit. A revision notice was issued on 02.02.2015. As the petitioner did not file objections, the respondent passed an order on 10.06.2015 reversing the input tax credit. The petitioner contended that the respondent relied on website information without providing details or conducting a proper inquiry. The petitioner further argued that no personal hearing was granted before the impugned order was passed, violating established procedures. The respondent is the Commercial Tax Officer, Shencottai (C). The tax period in dispute is 2013-14. The amount in dispute is the reversed input tax credit.

Key Issues

1. Whether the impugned order passed by the respondent reversing the input tax credit is liable to be quashed for non-compliance with procedural requirements, specifically concerning the provision of details from website data and the conduct of a personal hearing, as mandated by established legal principles and the judgment in Tvl.JKM Graphics Solutions Private Limited v. Commercial Tax Officer, Vepery Assessment Circle, Chennai (2017 (99) VST 343)? Petitioner's arguments: The petitioner argued that the respondent relied on information extracted from a website without furnishing the details to the petitioner. Furthermore, the revision notice did not enclose the specific website data used for the assessment. Crucially, the petitioner contended that the respondent failed to provide an opportunity for a personal hearing before passing the final order, thereby violating the principles of natural justice and the procedure laid down by this Court in similar cases. The petitioner relied on the precedent set in Tvl.JKM Graphics Solutions Private Limited. Respondent's arguments: The respondent did not record any specific arguments against the petitioner's contentions regarding procedural irregularities.