Madras High Court
Tvl.Essa Garments vs The Assistant Commissioner (Ct) on 7 January, 2021
WA.No.1 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.1.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Writ Appeal No.1 of 2021 & CMP.No.1 of 2021
Tvl.Essa Garments ...Appellant
Vs
The Assistant Commissioner (CT)
(FAC), Bazaar Circle, Tirupur. ...Respondent
APPEAL under Clause 15 of the Letters Patent against the order
dated 13.10.2020 made in W.P.No.3163 of 2016.
For Appellant: Mr.R.Senniappan
For Respondent : Mrs.G.Dhanamadhri, GA(T)
Judgment was delivered by T.S.SIVAGNANAM,J
We have heard Mr.R.Senniappan, learned counsel for the
appellant and Mrs.G.Dhanamadhri, learned Government Advocate
(Taxes) accepting notice for the respondent.
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
2. This appeal is directed against the order dated 13.10.2020 in
W.P.No.3163 of 2016 filed by the appellant herein.
3. The learned Single Judge, by the impugned order, dismissed
the writ petition on the ground that the appellant should avail the
alternate remedy available to them under the provisions of the Tamil
Nadu Value Added Tax Act, 2006 (for short, the Act).
4. The issue involved in this appeal lies in a very narrow
compass and therefore, the writ appeal itself is taken up for final
disposal.
5. The appellant – dealer is engaged in garment business and it
is a proprietorship concern. The proprietor of the appellant was also a
partner of one M/s.Essa Hosiery Mills, which was also carrying on
business in the very same address of the appellant – dealer, but was
holding a separate registration and tax payer identification number.
6. The case of the appellant is that the said M/s.Essa Hosiery
Mills closed down its business during the assessment year 2011-12
and as on the date of closure, the said dealer was entitled for a refund
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
of Rs.15,66,596/-. However, the said M/s.Essa Hosiery Mills was liable
to pay a sum of Rs.81,906/- towards central sales tax liability and after
deducting the said amount, they claimed that they were entitled for
refund of excess input tax credit of Rs.14,84,690/-. Since the appellant
was also carrying the business within the same assessment circle, it
appears that they made a request that the amount, which was
refundable to the tune of Rs.14,84,690/-, might be adjusted towards
sales tax arrears payable by the appellant for the assessment years
2009-10 and 2010-11. This request was favourably considered by the
Assessing Officer and an adjustment was effected. Thus, the matter
attained finality and it appears that the said M/s.Essa Hosiery Mills also
surrendered their registration.
7. While so, on 20.2.2015, the Assessing Officer issued a notice
to the said M/s.Essa Hosiery Mills stating that the adjustment done
towards the sales tax dues payable by the appellant herein could not
be made in the light of Section 19(17) of the Act. Hence, the said
M/s.Essa Hosiery Mills filed W.P.No.6640 of 2015 challenging the said
notice and a learned Single Judge of this Court allowed the same by
order dated 10.3.2015 and the said notice dated 20.2.2015 was
quashed.
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
8. In the meantime, the appellant herein was served with an
order dated 16.2.2015 under the provisions of the Central Sales Tax
Act, 1956 and this was challenged by filing W.P.No.13239 of 2015.
Another learned Single Judge of this Court found that the reversal of
the input tax credit granted to the appellant could not have been done
without providing an opportunity and the said order 16.2.2015 fell foul
of Section 84 of the Act. Accordingly, the said order dated 16.2.2015
was quashed by order dated 29.4.2015 and the matter was remitted
back to the Assessing Officer for a fresh decision.
9. Pursuant to that, an order dated 05.12.2015 was passed.
Though, at the first blush, it appears to a detailed order, the finding
rendered by the Authority was only in the penultimate paragraph of
the order and the remaining paragraphs were the contentions
advanced by the appellant in their written submissions. The Assessing
Officer referred to Section 19(14) of the Act and stated that transfer of
excess input tax credit from the said M/s.Essa Hosiery Mills to M/s.Essa
Garments could not be made. This order was put to challenge by filing
W.P.No.3163 of 2016, which was dismissed by the impugned order.
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
10. The learned Government Advocate would vehemently
contend that the appellant should avail the alternate remedy, which is
provided under the Act and that the learned Single Judge rightly
refused to entertain the present writ petition.
11. The learned Government Advocate is right in her submission
that this Court would be slow in interfering especially with cases
arising under the Taxation Statute. However, this is a self imposed
restriction since there is no absolute bar for interference under Article
226 of The Constitution of India if it is found that the action is wholly
unreasonable and unsustainable. Further, in the instant case, there is
no necessity to examine any disputed questions of fact and therefore,
this Court would be well justified in exercising discretion under Article
226 of The Constitution of India.
12. At the first instance, the amount of input tax credit, which
was lying in excess to the credit of the said M/s.Essa Hosiery Mills, was
adjusted by the Department in respect of the arrears payable by the
appellant. This adjustment took place much prior to February 2015.
Probably such adjustment might have been on a request made by the
appellant. However, nevertheless, it is the Department, which has done
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
the adjustment. The reason for proposing to reverse that adjustment
was by referring to Section 19(17) of the Act stating that the appellant
is a separate dealer and adjustment from another dealer's account
could not have been done. This notice was quashed by a learned Single
Judge of this Court by order dated 10.3.2015 in W.P.No.6640 of 2015
filed by the said M/s.Essa Hosiery Mils. Thereafter, the question of
reopening the matter by the Department by invoking its jurisdiction
against the appellant does not arise.
13. Assuming for the sake of argument that if we are to accept
the submission of Mrs.G.Dhanamadhri, learned Government Advocate
appearing for the respondent, the consequence, which would follow is
that the Department has to refund the amount of Rs.14,84,690/-
together with interest from January 2015 i.e when the adjustment was
made till the date it is paid and the interest should be definitely
compensatory. From the facts placed before the Court in the two
earlier writ petitions as well as before the learned Single Judge in the
impugned order, it is clear that the excess input tax credit, which
accrued to the said M/s.Essa Hosiery Mills is not in dispute. Therefore,
it will be too late in the day for the Department now to reopen the
entire issue and conduct an autopsy of the matter especially because
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
the adjustment was at the behest of the Department.
14. Even assuming that the adjustment was erroneous and it
had to be reversed, then the dealer would have to be refunded the
entire amount with interest, which, in our opinion, should be not less
than 18% per annum. Thus, considering the factual situation and
bearing in mind the interest of the Revenue, we are of the considered
view that the order dated 04.12.2015 impugned in the present writ
petition has to be quashed. We make it clear that this judgment is
rendered in the peculiar facts and circumstances of the case and shall
not be treated as a precedent.
15. For the reasons stated above, the writ appeal is allowed, the
impugned order dated 13.10.2020 is set aside, W.P.No.3163 of 2016 is
allowed and the order dated 04.12.2015 impugned in W.P.No.3163 of
2016 is quashed. No costs. Consequently, the connected CMP is closed.
07.1.2021
RS
https://www.mhc.tn.gov.in/judis/
WA.No.1 of 2021
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
To
The Assistant Commissioner (CT) (FAC), Bazaar Circle, Tirupur.
WA.No.1 of 2021&
CMP.No.1 of 2021
07.1.2021
https://www.mhc.tn.gov.in/judis/
