Madras High Court
P.Rajendran vs The Commissioner Of Commercial ... on 15 April, 2021
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 15.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE J.NISHA BANU
W.P.(MD)Nos.19701, 20826,27058 & 27059 of 2019
and
WMP(MD) Nos.16182,17412, 23398 & 23400 of 2019
P.Rajendran,
Contractor, aged about 56 years,
S/o Periyannan,
Puliyadithammam,
Kalaiyarkoil Taluk,
Sivagangai District – 630 405. Petitioner in
WP(MD) No.19701/ 2019
M.Krishnamoorthy,
Contractor, aged about 62 years,
S/o Muniyandi,
169/14, Jaihindh Street,
Sivagangai -630 561. Petitioner in
WP(MD) No.20826/2019
K.Annadurai,
Contractor, aged about 69 years,
S/o Kalimuthu,
Thondi Main Road,
Thiruvadanai,
Ramanathapuram District – 623 407. Petitioner in
WP(MD) Nos.27058 &
27059/2019
Vs.
1/10
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
1.The Commissioner of Commercial Taxes,
O/o The Principal and Special Commissioner of
Commercial Taxes,
Ezhilagam, Chepauk,
Chennai – 600 005.
2.The Assistant Commissioner (CT),
Sivagangai Assessment Circle,
Commercial Taxes Office,
No.3, Oversupillai Street,
Sivagangai – 630 561. Respondents in all
WPs.
COMMON PRAYER: Writ petitions filed under Article 226 of the
Constitution of India, to issue a Writ of Certiorari, calling for the records
pertaining to the impugned proceedings of the second respondent in TIN:
33285401237/2010-11, dated 22.03.2017, TIN:33705401297/2012-2013
dated 18.05.2017, TIN:33075460959/2009-10(D-10) dated 15.06.2018
and TIN:33075460959/2011-12(D-28) dated 15.06.2018 and quash the
same.
For Petitioner : Mr.Raja Karthikeyan
For Respondents : Mrs.J.Padmavathi Devi
Special Government Pleader
(In all WPs.)
COMMON ORDER
These instant Writ Petitions have been filed by the petitioners
to quash the impugned proceedings of the second respondent.
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
2. The petitioners are the work contractors registered with the
second respondent. According to the petitioners, the second respondent
after passing deemed cum original assessment orders under Section 22(2)
of the TNVAT Act, had revised the assessment order under Section 27 of
the TNVAT Act, by adding adhoc addition for certain defects in the
accounts. The grievance of the petitioners is that the second respondent
passed the impugned Revision of Assessment orders even without any
new/fresh facts or materials, de hors the records and on mere change of
opinion, which is against the provisions of the TNVAT Act.
3.The learned counsel for the petitioner would submit that the
alleged purchase suppression pursuant to the web report is totally strange
and even the copies of the alleged web report have not been served on
the petitioners. To support the aforesaid contention, the learned counsel
would rely upon the judgment of this Court in the case of Tvl.JKM
Graphics Solution Pvt Ltd, reported in 99 VST page 343, in which, it
has been held that the web report shall only be a starting point of enquiry
and a detailed intra-department enquiry shall by conducted before
making an assessment based on the web report. The learned counsel for
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
the petitioner would also rely upon the similar order of this Court made
in batch of Writ Petitions in W.P(MD)Nos.16874 to 16878 of 2018
etc.,and would pray to quash the impugned orders.
4.The learned Special Government Pleader appearing for the
respondents would reiterate the contentions set out in the counter
affidavit. She would produce the latest circular No.5 of 2021
LW10/12521/2016, dated 24.02.2021 issued by the Office of the
Principal Secretary/Commissioner of Commercial Taxes, Chennai before
this Court, wherein, procedure has been evolved for all the pending and
future litigations pertaining to mis-match issues.
5.Heard the learned counsel appearing for the petitioner and
the learned Special Government Pleader appearing for the respondents.
6.As pointed out by the learned counsel for the petitioner that
the issues involved in these present writ petitions are squarely covered by
the order of this Court in batch of Writ Petitions in W.P(MD)Nos.16874
to 16878 of 2018 etc, wherein, the learned single judge has elaborately
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
discussed the issue in question and the relevant paragraphs are extracted
hereunder for better appreciation.
“4.In all these cases, the assessing officer had
imposed penalty by separate orders. As pointed out
by the learned counsel appearing for the writ
petitioners, the penalty can be imposed by separate
orders only under Section 22(5) of the TNVAT Act.
If penalty is to be imposed under Section 27(3) of
the TNVAT Act, then it has to form part of the
assessment order and not by a separate order. This
principle is no longer res integra. It has been so
held as early as in the decision reported in (1976)
38 S.T.C. 382(Mad) (The Deputy Commissioner
(C.T), Coimbatore Vs. V.S.R.Ramaswami Chettiar
and Bros). The said decision was followed in the
decision reported in (2011) 37 V.S.T. 592 (mad)
(Rainbow Foundations Ltd., V.Assistant
Commissioner (C.T)(FAC), T.Nagar (South)
Assessment Circle, Chennai). It has been held that
an order passed by the assessing authority levying
penalty through an independent order is bad in law.
Therefore, respectfully following the aforesaid
decisions, the orders of penalty imposed in these
writ petitions stand set aside.
5.A mere look at the impugned orders indicates that
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
the impugned exercise was undertaken not pursuant
to any discovery of new material. The very recital
paragraph starts as follows:-
“Verification of the assessment records
reveals that...”
It has been consistently held that the reopening of
assessment by change of opinion is impermissible.
This proposition was reiterated by the Honourable
Supreme Court in the decision reported in (1993)
V.S.T.441 (Ravi Prakash Refineries (P) Ltd,
Vs.State of Karnataka).
6.The learned counsel appearing for the writ
petitioners also placed reliance on the decision of
this Allahabad High Court reported in (1998) 109
S.T.C 631 (All) (Parikh and Sons V.Trade Tax
Officer, Sector 6) in which it has been stated that
irrespective of the amplitude of the language used
in the statutory provisions, reassessment
proceedings are not permissible on mere change of
opinion by the statutory authority at a subsequent
stage.
7.In the present case, it appears that reassessment
proceedings have been initiated following the
raising of objections of the internal audit.
8.The petitioners herein are works contractors. The
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
purchase tax under Section 12 of the TNVAT Act
has been levied on them. It has been held in the
decision reported in (1986) 61 S.T.C 337 (The State
of Tamil Nadu Vs.East Coast Constructions and
others) that where the goods have been used in the
construction of buildings, such user cannot be said
to be a disposal of goods as contemplated by clause
(b) of Section 7-A(1) of the Tamil Nadu General
Sales Tax Act, 1959. The said provision is in pari
materia with Clause (b) of Section 12 of the TNVAT
Act. The transaction in which the petitioners are
engaged is said to constitute deemed sales.
9.Therefore, when the petitioners have already been
visited with tax on that count, they cannot also be
saddled with levy of purchase tax. Therefore, for all
these reasons, the orders impugned in these writ
petitions are set aside. The Writ Petitions stand
allowed, accordingly. No costs. Consequently,
connected Miscellaneous Petitions are closed”
7.Admittedly, in all these cases, penalty has been imposed vide
separate orders. It has been held that when imposing penalty under
Section 27 of the Act, the same will have to form part of the assessment
order and they cannot be levied though a separate order. Therefore,
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
imposition of penalty in these cases is bad in law. Likewise, the
petitioners being works contractors engaged in civil construction, cannot
be levied with purchase tax. Therefore, levying purchase tax also will
have to go. But then, this Court accepts the submission of the petitioner's
counsel that the impugned proceedings will have to be questioned on the
ground of change of opinion. The impugned orders would indicate that
the revision is an outcome of the verification of the assessment records. It
is also a fact that the assessing officer proceeded based on the web report
which indicates mismatch. Therefore, the impugned proceedings cannot
be characterized as being grounded only on change of opinion. But then,
when according to the assessing officer, there is a purchase omission, the
assessing officer could not have simultaneously resorted to adhoc
addition. But then, while revising the petitioner's assessment on the
ground of purchase omission as disclosed by the web report, the
assessing officer will have to follow the procedure contemplated in
Circular No.5 of 2021 LW10/12521/2016, dated 24.02.2021 issued by
the Office of the Principal Secretary/Commissioner of Commercial
Taxes, Chennai.
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
8.The Writ Petitions stand allowed, accordingly. The matter is
remitted to the file of the second respondent to pass orders afresh in
accordance with law. No costs. Consequently, connected miscellaneous
petitions are closed.
15.04.2021
vrn (2/2)
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 Assistant Commissioner (CT),
Sivagangai Assessment Circle,
Commercial Taxes Office,
No.3, Oversupillai Street,
Sivagangai – 630 561.
https://www.mhc.tn.gov.in/judis/
W.P.(MD)Nos.19701,20826,27058 & 27059 of 2019
J.NISHA BANU, J.
vrn
Common Order made in
W.P.(MD)Nos.19701, 20826,27058 & 27059 of 2019
and
WMP(MD) Nos.16182,17412, 23398 & 23400 of 2019
15.04.2021
(2/2)
https://www.mhc.tn.gov.in/judis/
