Tamil Nadu Newspapers LTD. vs. The Assistant Commissioner

Held

The Court held that the show cause notice dated February 16, 2017, was not in consonance with Section 27(2) of the TNVAT Act, 2006, as it did not contain full particulars necessary for the petitioner to respond effectively. The Court relied on the precedent of JKM Graphics Solutions Private Limited v. Commercial Tax Officer, Vepery Assessment Circle, Chennai, to support this finding. Furthermore, the Court noted the internal contradiction within the impugned order, where the respondent accepted the petitioner's explanation but still confirmed the proposed demand. The Court also addressed the respondent's objection regarding the alternative remedy, reiterating the settled legal position that the existence of an alternative remedy does not automatically oust the High Court's jurisdiction under Article 226, particularly when the show cause notice is demonstrably flawed. Consequently, the impugned order and the show cause notice were quashed. The respondent was granted liberty to proceed afresh in accordance with law. The Court expressly left no issue undecided.

Facts

The petitioner, Tamil Nadu Newsprint Papers Ltd., a Government of Tamil Nadu undertaking and manufacturer of printing paper, is an assessee of the respondent, The Assistant Commissioner (CT)(FAC). The dispute pertains to the assessment year 2014-15. The petitioner filed monthly returns, which were deemed assessed. Subsequently, the respondent issued a show cause notice dated February 16, 2017, alleging improper availing of input tax credit (ITC) and proposing a reversal of ITC amounting to Rs. 1,01,88,480/-. The petitioner submitted a reply supported by a Chartered Accountant's report. The respondent, by an order dated December 13, 2017, confirmed the proposed reversal, despite observing that the petitioner's reply and statement were verified and accepted, while simultaneously stating there was a short reversal of ITC to the tune of Rs. 1,01,88,480/-.

Key Issues

1. Whether the show cause notice dated February 16, 2017, issued under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006, is invalid for not containing full particulars, thereby preventing the petitioner from adequately responding to the case against it? The petitioner argued that the show cause notice lacked necessary details, citing the precedent of JKM Graphics Solutions Private Limited v. Commercial Tax Officer, Vepery Assessment Circle, Chennai, which held that such notices must disclose full particulars. The petitioner also contended that the impugned order suffers from internal contradiction, accepting the petitioner's explanation while simultaneously confirming the proposed demand. 2. Whether the existence of an alternative remedy of appeal bars the High Court from entertaining the writ petition? The respondent contended that the petitioner should avail the effective alternative remedy of appeal. The petitioner argued that the High Court's jurisdiction under Article 226 is not ousted merely by the existence of an alternative remedy, especially when the foundation of the order (the show cause notice) is flawed.