Tvl.Palaniyappa Stores vs. The Commissioner Of Commercial Taxes
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The petitioner, Tvl.Palaniyappa Stores, represented by its proprietor, filed three writ petitions challenging orders dated 23.05.2019 passed by the Commercial Tax Officer, Nilakottai. The impugned orders pertained to the tax periods 2012-13, 2013-14, and 2014-15. The petitioner was under a compounding scheme. The assessing authority observed a discrepancy between the petitioner's purchase turnover and sales turnover, leading to the conclusion that the accounts were fudged. The petitioner's defense was that due to her old age, she closed her business and transferred stock to her son and daughter-in-law, which was reflected in their profit and loss accounts. She also contended that since all parties were under the compounding scheme, purchase turnover disclosure was unnecessary, and purchase turnover does not form part of sales turnover. The assessing authority was not satisfied with this explanation, leading to the impugned orders.
Held
The Court held that the impugned orders passed by the second respondent are liable to be quashed solely on the ground that the petitioner was denied an opportunity of personal hearing. The Court referred to the Division Bench judgment of the Madras High Court in G.V.Cotton Mills (P) Ltd., V. The Assistant Commissioner(CT), which clearly stated that even if objections to pre-assessment notices are not submitted, the assessing authority must still provide an opportunity for a personal hearing by issuing a notice. The failure to submit objections does not grant the assessing officer the right to deny a personal hearing. The Court also noted the Supreme Court's observation in Swami Devi Dayal Hospital and Dental College v. Union of India, that a hearing is required even in the absence of a specific statutory provision, unless expressly excluded. Consequently, the impugned orders were quashed, and the matter was remitted back to the second respondent for fresh consideration. The petitioner agreed to appear before the second respondent on 08.03.2020 at 11:00 a.m., either in person or through an authorized representative, for a hearing and fresh orders.
Key Issues
1. Whether the impugned orders passed by the second respondent are liable to be quashed on the ground of denial of personal hearing to the petitioner, as per principles of natural justice and relevant High Court precedents? The petitioner argued that the assessing authority failed to provide a personal hearing, which is a fundamental aspect of natural justice. They relied on the Division Bench judgment of the Madras High Court in G.V.Cotton Mills (P) Ltd., V. The Assistant Commissioner(CT), which held that denial of personal hearing is impermissible even if objections to pre-assessment notices were not filed. The petitioner also cited the Supreme Court's observation in Swami Devi Dayal Hospital and Dental College v. Union of India, emphasizing the requirement of a hearing unless statutorily excluded. The respondents (Revenue) did not record any specific arguments against the petitioner's contention regarding the denial of personal hearing.
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Before: and
Heard the learned counsel on either side. 2.Though the petitions are three in number, the petitioner is one and the same. The assessment years pertain to 2012-13, 2013-14 and 2014-15. The petitioner was under compounding scheme. The second respondent noticed that there is no proper correspondence between the petitioner's purchase turnover and her sales turnover. From this, the assessing authority came to the conclusion that the petitioner had fudged the accounts. The stand of the petitioner was that due to her old age, she had closed down her business and had transferred all the stock to her son and daughter-in-law. She would make a further claim that all the transfer of stocks has been duly reflected in the profit and loss accounts of her son and daughter- in-law. It is further claimed that since the petitioner as well as her son and daughter-in-law are under compounding scheme, there is no need to disclose the purchase turnover. It is also well settled that the purchase turnover will not form a part of the sales turnover. This was the stand taken by the petitioner. Not satisfied with the same, the impugned orders came to be passed. They are under challenge in the writ petitions. 3.I do not want to go into the merits of the matter. There is no dispute that the assessing authority did not give the opportunity of personal hearing to the petitioner. 4.The Hon'ble Division Bench of Madras High Court in the decision reported in [2019] 60 GSTR 418(Mad) (G.V.Cotton Mills (P) Ltd., V. The Assistant Commissioner(CT), Avarayampalayam Assessment Circle, Coimbatore) held as follows:- “Denial of personal hearing:
The respondent denied the appellant opportunity of hearing only on the ground that objection was not given to the pre-assessment notices. Even if objection was not given, still the assessing authority was expected to post the matter for hearing by issuing notice to the assessee. In case the assessee fail to appear, it is open to the assessment authority to pass orders on merits. We make the position clear that the failure to submit objection to the pre assessment notice would not give a right to the assessment officer to deny opportunity of personal hearing to the assessee.
The Supreme Court in Swami Devi Dayal Hospital and Dental College v. Union of India MANU/SC/0873/2013 : [2013] 10 Scale 608 observed that even in the absence of a specific provision of giving hearing, the hearing is required in such cases, unless specifically excluded by a statutory provision.“ 5.On this sole ground, the impugned orders are quashed. The matter is remitted to the file of the second respondent. The 2/3 https://hcservices.ecourts.gov.in/hcservices/
W.P.(MD)Nos.16300,16304&15887/2019 petitioner's counsel states that he would not insist of any formal personal hearing notice and that the petitioner would appear either by herself or her authorised representative before the second respondent on 08.03.2020 at 11.00 a.m., On the said date, the second respondent herein will hear the petitioner and thereafter, pass orders afresh in accordance with law. 6.The Writ Petitions are allowed. No costs. Consequently connected miscellaneous petitions are closed. Assistant Registrar () //// / /2021 Sub Assistant Registrar(CS) RMI Note :In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate/litigant concerned. To 1.The Commissioner of Commercial Taxes, O/o The Principal and Special Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai-600 005. 2.The Commercial Tax Officer, Commercial Taxes Office, No.1-4-36, B7/1, Periyar Colony, Madurai Road, Nilakottai, Dindigul District-624 208. +1 CC to Mr.B.ROOBAN, Advocate ( SR-6908[F] dated 24/02/2021 ) +1 CC to THE SPECIAL GOVERNMENT PLEADER(SR-6919[F] dated 24/02/2021) Order made in W.P.(MD)Nos.16300,16304&15887/2019 and M.P.(MD)Nos.12956,12958&12612/2019 23.02.2021 NS(CO) SRS (09/03/2021) 3P : 5C 3/3 https://hcservices.ecourts.gov.in/hcservices/
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.