Tvl.Maharaja Readymades vs. The Commercial Tax Officer

Held

The Court held that the impugned orders dated 07.07.2017 were non-speaking orders and were liable to be set aside. The Court found that the Commercial Tax Officer had failed to apply their mind to the detailed explanations and objections submitted by the petitioner in their reply dated 20.04.2017. The Court reiterated its consistent view that tax officers must act as quasi-judicial authorities and pass speaking orders that address all objections raised by the assessee. The respondent's contention that the petitioner had admitted facts before the Enforcement Wing was not sufficiently substantiated to override the requirement of a speaking order addressing the petitioner's subsequent detailed objections. The Court found that the principles laid down in the cited cases (33 VST Page 333 and 146 STC Page 642) regarding the necessity of a speaking order and adherence to natural justice were disregarded. Consequently, the Court set aside the impugned orders and remitted the matter back to the respondent for fresh disposal. The respondent was directed to consider the petitioner's objections carefully and pass appropriate orders after hearing the petitioner within two months.

Facts

The petitioner, Tvl. Maharaj Readymades, a dealer in readymade garments, filed two writ petitions challenging orders dated 07.07.2017 passed by the Commercial Tax Officer, Ramanathapuram. These orders pertained to the assessment years 2014-2015 and 2015-2016. The petitioner's business was inspected on 31.10.2016, and the inspecting officers alleged discrepancies in purchases and sales, citing differences in returns, profit and loss accounts, and un-reported inter-state purchases. Without providing an opportunity to the petitioner, proposals were forwarded to the respondent to levy tax and penalty by re-opening completed assessments. The respondent issued revision notices proposing taxes and penalties under various sections of the TNVAT Act. The petitioner submitted a detailed reply on 20.04.2017, denying any suppression. However, the respondent confirmed the proposals without referring to the petitioner's reply.

Key Issues

1. Whether the impugned orders dated 07.07.2017, passed by the Commercial Tax Officer, Ramanathapuram, are liable to be quashed as illegal, invalid, and against the Principles of Natural Justice, particularly concerning the alleged failure to consider the petitioner's detailed reply dated 20.04.2017 and the absence of a speaking order, as argued by the petitioner. 2. Whether the impugned orders can be construed as non-speaking orders, failing to address the petitioner's objections and thereby violating the principles of natural justice and established judicial precedents, as contended by the petitioner. Petitioner's arguments: The petitioner argued that the impugned orders were passed without application of mind, failed to refer to the petitioner's detailed reply and objections, and were therefore non-speaking orders. They contended that the respondent acted contrary to the principles of natural justice and the precedents laid down by the High Court in cases reported in 33 VST Page 333 and 146 STC Page 642, by not granting an opportunity of personal hearing and by not passing a speaking order. The petitioner asserted that there was no suppression of sales or purchases. Respondent's arguments: The respondent argued that the impugned orders were not non-speaking orders. They contended that the revision notices clearly called for replies, which the petitioner submitted. The respondent claimed that the petitioner had admitted facts before the Enforcement Wing Officers on 21.10.2016, making the subsequent objections unacceptable. Therefore, the revised assessment orders were passed based on this admission.