Madras High Court
M/S.Sonal Steel Trading Company ... vs Assistant Commissioner (Ct) on 5 February, 2021
W.A.Nos.65 and 67 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.02.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Orders Reserved On Orders Pronounced On
27.01.2021 05.02.2021
W.A.Nos.65 and 67 of 2021
and
C.M.P.Nos.573, 574, 576 and 579 of 2021
M/s.Sonal Steel Trading Company Pvt. Ltd.,
Rep. by its Director,
No.8/28, Amman Koil Street,
Moore Market, Chennai – 600 003. .. Appellant
in both cases
-vs-
Assistant Commissioner (CT),
Moore Market Assessment Circle,
Chennai – 600 001. .. Respondents
in both cases
Appeal under Clause 15 of the Letters Patent to set aside the order
dated 27.06.2019 made in W.P.Nos.6370 and 6371 of 2019
For Appellant : Mr.S.Raveekumar
For Respondents : Mr.Mohammed Shaffiq
Special Government Pleader
1/10
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W.A.Nos.65 and 67 of 2021
JUDGMENT
T.S.SIVAGNANAM,J
These appeals are directed against the common order dated
27.06.2019 in W.P.Nos.6370 and 6371 of 2019 filed by the appellant.
2.The writ petitions were filed challenging the order of assessments
passed by the respondent under the provisions of the Tamil Nadu Value
Added Tax Act, 2006 [hereinafter referred to as “the TNVAT Act”] for the
assessment year 2014-15 and 2015-16 respectively.
3.Before the learned writ court the assessee mainly canvassed two
points. Firstly with regard to the allegation that the purchase effected from
registration cancelled dealers and the second issue was with regard to the
mismatch in the returns filed by the purchasing and selling dealer. The
assessee placed reliance on the decision of the Hon'ble Supreme Court in
the case of State of Maharashtra vs. Suresh Trading Company [1998 109
STC 439 (SC)] and the judgment of this Court in the case of M/s.JKM
Graphics Solutions Private Limited vs. The Commercial Tax Officer,
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W.A.Nos.65 and 67 of 2021
Vepery Assessment Circle, Chennai-6 [99 VST 343]. The respondent
resisted the grounds raised by the appellant contending that the respondent
has strictly adhered to the principles laid down in the aforementioned
decision with regard to both the points canvassed by the appellant. In this
regard, the learned Government Advocate referred to the relevant portion of
the impugned assessment orders. By way of reply, the learned counsel for
the appellant contended that there are several errors in the exercise that has
been carried out by the respondent on both the points.
4.The learned writ court took note of the submissions on either side
and held that the errors which are being pointed out by the writ petitioner
are by making submissions on the merits of the matter and therefore, the
Court is not inclined to entertain the writ petition as the appellant has an
effective statutory alternative remedy in terms of section 51 of the Act. The
Court after referring to the decision of the Hon'ble Supreme Court in United
Bank of India vs. Satyawati Tondon and others [(2010) 8 CC 110] and the
decision in the case of Authorized Officer, State Bank of India vs.
K.C.Mathew [(2018) 3 SCC 85], examined as to whether the case would fall
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W.A.Nos.65 and 67 of 2021
within any of the exceptions which have been adumbrated and whether the
jurisdiction under Article 226 of the Constitution of India can be exercised.
After considering the factual position the Court was convinced that there
was no reason to allow the appellant to by-pass the appellate remedy.
Accordingly, writ petitions were disposed of by relegating the appelant to
avail the statutory appellate remedy. Challenging the said order, the
appellant is before us by way of these appeals.
5.We have elaborately heard Mr.S.Raveekumar, learned counsel for
the appellant and Mr.Mohammed Shaffiq, learned Special Government
Pleader for the respondent.
6.The grounds raised in the writ petitions have been reiterated and
canvassed in a slightly different form before us as the learned counsel who
appears in the appeals did not appear in the writ petitions. In the typed set,
apart from material papers the learned counsel has also enclosed as many as
16 judgments and orders. These decision have been pressed into service to
state that sales tax proceedings are quasi judicial in nature. Therefore, the
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W.A.Nos.65 and 67 of 2021
principles of natural justice are applicable; retrospective cancellation of
registration does not affect the right of the purchasing dealer; the dealer
cannot be denied claim of input tax credit on the ground that assessment on
the dealer's vendor has not been made under the Act; retrospective
cancellation of registration certificates of selling dealer cannot affect the
right of purchasing dealer; reversal of input tax credit on the ground of
cancellation of registration certificates of the selling dealer with
retrospective effect cannot be done; if the selling dealer failed to file returns
or disclose turnover and paid tax thereon cannot be a ground for reversal of
ITC in the hands of purchasing dealer; re-assessment solely on the basis of
mismatch between the details shown in the dealer's return and the details of
the other end dealer available on the Department website is not permissible.
7.The larger and the more predominant issue that we need to take
note of is whether the learned Single Bench was right in relegating the
appellant to avail the appellate remedy under Section 51 of the TNVAT Act.
While doing so, the learned writ court took note of the submission of the
learned Government Advocate that the procedure laid down on both the
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W.A.Nos.65 and 67 of 2021
points, namely, purchases from registration cancelled dealers and the
mismatch issue were considered by applying the law laid down in the
decision referred to by the appellant. Thus, we need to see as to whether the
Assessing Officer had examined the issues or in a summary manner
completed the assessment. To examine this, we take into consideration the
order of assessment dated 22.11.2018 for the assessment year 2014-15. To
be noted that the re-assessment proceedings commenced pursuant to a
surprise inspection conducted in the place of business of the appellant on
13.07.2017. A show cause notice has been issued and details of invoice
wise mismatch was furnished to the appellant. The appellant submitted the
reply on 11.05.2017 stating that they have purchased from registered dealers
by paying tax. The appellant also referred to various decision of this Court.
The correctness of the same was examined by the Assessing Officer and she
had concluded as follows:
Conclusion of the Assessing Officer:
........In the instant cases, they have not tallied the
difference of turnover, between reported by them and that
of reported at the other end. They have enclosed certain
invoices, which has no classified summary support or
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W.A.Nos.65 and 67 of 2021
category support to tally with the transactions, caused the
difference. The Bank statement, attached by them, also
has no classified details to verify the transactions leading
to the difference and consider at their favour. Hence, it is
clear that their contention is not sustainable but a trial to
make use of the benefit of the High Court judgment,
without establishing their genuineness. In the absence of
genuineness on their part and as they have not provided
the clear reconciliation and classification, on the
differences pointed out, to examine with other end and
conduct enquiry. Moreover, as far as the purchases from
RC cancelled dealers, the Registration of a dealer is not
cancelled on incidental requirement at once. It is
cancelled only based on the perpetual default on the part
of the selling dealer. When the perpetual default is
existing, the transaction, made with them is subject to the
verification only. Moreover, the dealers have not
furnished any documentary evidence for their proof for
movement of goods, without which the physical
occurrence of the transaction cannot be established.
Hence it is clear that the dealer had purchased only bills
from the dealers whose registration was cancelled.
Hence, it is clear that their contention is not sustainable
but a trial.”
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W.A.Nos.65 and 67 of 2021
8.Thus, we find that not only the stand taken by the appellant was
examined by the Assessing Officer but the Assessing Officer has gone one
step further to observe that the dealers have not furnished any documentary
evidence for proof for movement of goods without which the physical
occurrence of the transaction cannot be established. Therefore, we are not
inclined to accept the submission made on behalf of the appellant that the
Assessing Officer has brushed aside the legal position and concluded the
assessment rather the Assessing Officer has rendered a opinion on the
available facts and taking note of the reply given by the appellant.
Therefore, if according to the appellant this conclusion is factually wrong
that needs to be agitated in an appeal and to be adjudicated by the appellate
authority and not by a writ court. Therefore, we are of the considered view
that the learned Single Bench was right in relegating the appellant to avail
the available remedy of appeal.
9.Accordingly, the writ appeals are dismissed with liberty to the
appellant to file an appeal before the first appellant authority and if such
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W.A.Nos.65 and 67 of 2021
appeal is filed within a period of thirty days from the date of receipt of copy
of this judgment, the appellate authority shall entertain the appeal without
reference to limitation and take a decision on merits and in accordance with
law uninfluenced by any observation made by this Court or in the order
passed in the writ petitions. No costs. Consequently, connected
miscellaneous petitions are closed.
(T.S.S., J.) (R.N.M., J.)
05.02.2021
Index: Yes/ No
Speaking Order : Yes/ No
cse
To
Assistant Commissioner (CT),
Moore Market Assessment Circle,
Chennai – 600 001.
https://www.mhc.tn.gov.in/judis/
W.A.Nos.65 and 67 of 2021
T.S.Sivagnanam, J.
and
R.N.Manjula, J.
cse
W.A.Nos.65 and 67 of 2021
and
C.M.P.Nos.573, 574, 576 and 579 of 2021
05.02.2021
https://www.mhc.tn.gov.in/judis/
