Madras High Court
M/S.Supreme Trading House vs The Assistant Commissioner (St) on 7 October, 2021
W.A.Nos.2612 to 2617 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.10.2021
CORAM :
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
W.A.Nos.2612 to 2617 of 2021
and
C.M.P.Nos.17107 to 17112 of 2021
M/s.Supreme Trading House,
Represented by its Proprietor,
A.IbrahimKaleel
No.86, Kariya Gounder Street,
Khaderpet,
Tirupur – 641 601. ... Appellant
in all appeals
Vs.
1.The Assistant Commissioner (ST)
Central-II Assessment Circle,
Tiruppur – 2.
2.The Commercial Tax Officer,
(Enforcement) Group I,
Coimbatore. ... Respondents
in all appeals
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Common Prayer : Writ Appeals in W.A.Nos.2612 to 2617 of 2021 filed
under Clause 15 of the Letters Patent to set aside the order, dated
13.07.2021, passed in W.P.Nos.15687, 15680, 15688, 15682, 15693 &
15684 of 2020 respectively.
For Appellant : Mr.P.Rajkumar
in all the appeals
For Respondents : Mr.M.Venkateswaran
Government Counsel
in all appeals
COMMON JUDGMENT
(Judgment was delivered by T.S. SIVAGNANAM, J.)
These Writ Appeals are directed against the common order, dated
13.07.2021, in W.P.Nos.15687, 15680, 15688, 15682, 15693 & 15684 of
2020.
2.The writ petitions were filed by the appellant challenging the
Assessment Order under the provisions of the Tamil Nadu Value Added Tax
Act, 2006 (“the Act” for brevity) for the Assessment Years 2011-12 to 2015-
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16. The writ petitions were dismissed on the ground that the petitioner have
been dragging on the matter and the petitioner was unable to do the
reconciliation and to reconcile the errors pointed out by the Department. We
are to test the correctness of the said observation in these appeals.
3.We have elaborately heard Mr.P.Rajkumar, learned counsel for the
appellant and Mr.M.Venkateswaran, learned Government Counsel, appearing
for the respondents.
4.The assessment for the subject Assessment Years were completed by
order dated 30.12.2016, which was a revision of assessment, pursuant to an
inspection conducted in the place of business of the appellant on 08.10.2015.
The allegations against the appellant is suppression of turnover. The
appellant was issued notice dated 07.12.2016, and stating that no reply or
objections were filed till 30.12.2016, the proposal was confirmed and the
reassessment was completed. This was put to challenge in W.P.Nos.3951 to
3956 of 2017. The Court found that there has been violation of principles of
natural justice, inasmuch as show cause notice was not received on time and
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accordingly, the writ petitions were disposed of by order dated 17.02.2017,
by issuing the following directions :
“8.Accordingly, the writ petitions are disposed of by
directing the petitioner to treat the impugned orders as show
cause notices and if the petitioner seeks copies of the
documents or records, the first respondent shall provide copies
of the same wherever it is permissible and viable. On receipt of
the copies of documents, the petitioner is directed to submit
their objections within a period of ten days therefrom and after
receipt of the objections, the first respondent shall afford an
opportunity of personal hearing and redo the assessments in
accordance with law within 15 days thereafter. Till fresh
orders of assessment are passed, no coercive action shall be
initiated by the first respondent to recover tax as computed in
the assessment orders. No costs. Consequently, the above
WMPs are closed.”
In terms of the above directions, if the appellant had sought for copies of
documents or records which were taken away during the inspection, the same
have to be provided whereever permissible and viable.
5.Pursuant to the said order, the respondent officer had issued notice,
dated 16.07.2019, directing the appellant to come over to the office of the
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respondent on 26.07.2019/30.07.2019, etc. The appellant had appeared
pursuant to the notice and the representation of the appellant, dated
03.12.2019, states that they have received the account books records, along
with the instructions and they have noted the contents and requested for 30
days' time to submit their reply. The respondent had permitted 15 days' time
and stated that no further delay is permitted, which has been noted in the
representation dated 03.12.2019. On 17.12.2019, the appellant had
submitted a representation stating that, though they sought 30 days, they
have been granted only 15 days' time and it is not sufficient to file
objections, as the assessment relates to six years and the recovery slips are
voluminous and verification of the slips with the Books of Accounts is a
cumbersome process and therefore, they requested time till 2nd week of
January, 2020. This representation was given in the office of the respondent
and received in the office on 17.12.2019, as per the endorsement in the Letter
Delivery Book.
6.Thereafter, personal hearing notice, dated 14.01.2020, was issued,
informing the appellant that copies of D7 records were given to the appellant
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W.A.Nos.2612 to 2617 of 2021
on 20.11.2019 and the appellant was requested to appear for personal hearing
on 24.01.2020/28.01.2020. By representation dated 20.01.2020, the
appellant had submitted that they are required to appear before this Court in
a Customs matter and requested to provide opportunity of personal hearing
on 29.01.2020 or 30.01.2020. Further, the officer fixed the personal hearing
on 28.01.2020. Subsequently, another representation dated 28.01.2020 was
given, requesting for time. In the representation dated 21.02.2020, the
appellant had pointed out as follows :
“The real fact in this case is that the entries in the slips
relate only to the purchase of hosiery cloth, which was
exempted by then. The quantity of hosiery cloth is weighed and
referred in kilograms only and the variety is referred in counts
like 20s, 40s, etc., as in the case of yarn. The quantity of
inward cloth purchased from various cloth suppliers were
recorded in the inward registers maintained by us was
recovered by the Enforcement Wing Officers, by issuing D-7
receipt.
The process of converting yarn into cloth is very simple
and it is called as knitting which is other form of weaving. Like
in weaving process, no more material is added to the yarn
knitted. In the process of weaving, the lengthy warp yarn is
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W.A.Nos.2612 to 2617 of 2021
loomed through weft yarn in a crisscross manner. Whereas in
knitting, vertical yarn is spirally knitted (like sweater knitting)
in a knitting machine to produce tubular form of cloth like a
hose pipe and that is why it is called a hosiery cloth. (hose-iery
meaning hose like).
Therefore, if a bag of 40s yarn containing 50 kg is
knitted into cloth, then the final output will be 50kgs of 40s
knitted hosiery cloth. There is no variation in the quantity after
the knitting process is over. As such, in order to identity the
cloth purchased from other suppliers, in the inward registers,
the quantity is mentioned in terms of number of bags and in
terms of kgs. In consequence, the Enforcement wing Officers,
mistook the units as referring to purchase of yarn and verified
in our Balance Sheet the purchase of yarn and found that only
very few purchases were available and proceed to propose
assessment.
This proposal of assessment treating the purchase of
cloth as purchase of yarn is not fair, legal or logical. Further,
the Enforcement Wing Officers have not at all processed the
slips by making deep scrutiny of slips and not at all verified
the entries made in the slips with reference to our books of
accounts. Had it been done, the Enforcement Wing officers
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would have found out that the actual purchases were only
exempted commodity of hosiery cloth and the entries thereto in
the slips refer and relate only to the purchase of Cloth.
Hence, when there was no proper scrutiny and
verification of slips carried out by. the Enforcement Wing
Officer, the assessment, if made, based on the Enforcement
proposal would amount to denial of natural justice.
Therefore, we request to process the slips by verifying
each and every entries in the slips with reference to our books
of accounts to find out whether entries contained in the slips
are duly reflected in the books of accounts. It is most
incumbent to do so before arriving at any conclusion on this
issue. We will be pleased to produce the books of accounts and
all the relevant documents in this regard on hearing from
you.”
The said representation has been received by the office of the respondent on
21.02.2020, as could be seen from the endorsement. Thereafter, the
assessment has been completed by order dated 18.03.2020, which were
impugned in the writ petitions.
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7.It is no doubt true that the respondent had granted reasonable time to
the appellant and the appellant had sought for adjournment on more than
three occasions. But their contention is that the reconciliation would take
certain time and they are required to explain to the Assessing Officer by
comparing the slips along with the ledger. This according to them is a very
cumbersome process, more particularly, when the assessment is for six
years. When the writ petitions were entertained, it appears that the
respondent was directed by the Court not to initiate any coercive action, not
in written orders, but by making certain oral observations. Thus, the
assessments have been kept pending since October, 2020. The writ petitions
have now been dismissed by the impugned order. We also find that no
liberty had been granted to the petitioner to file an appeal.
8.In our view, if the appellant has not made out a case for interference
in a writ petition, it would be appropriate to leave it open to the appellant to
avail the alternate remedy under the Act rather than foreclosing the issue. In
any event, we are of the view that, one more opportunity can be granted to
the appellant and nothing more. If the appellant is able to reconcile the slips
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with the ledger, then the Assessing Officer may take note of it and complete
the assessment. Only for such reason, we are inclined to grant one more
opportunity to the appellant, especially when in the Assessment Order, for
the first time, the Assessing Officer has referred to D7 records, which are
from Sl.Nos.1 to 15 and contained in the Books marked A to O. Therefore,
to that extent at least, the appellant should be permitted to reconcile the slips
with the ledger.
9.For the above reasons, these Writ Appeals are allowed and the order
passed in the writ petitions is set aside and consequently, the matter stands
remanded to the respondent for fresh consideration. The respondent shall fix
the date for personal hearing during the second week of November, 2021 and
on the date fixed, the appellant shall appear and no adjournment shall be
granted. The appellant shall produce the necessary slips and records and
give the required particulars in respect of D7 records as mentioned in the
Assessment Order and the said particulars be verified by the respondent and
the assessment be completed. If the appellant refuses to cooperate with the
assessment proceedings, the benefit of this order will not enure to the
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appellant and the Writ Appeals will be dismissed automatically without
reference to this Court, thereby, reviving the order passed in the writ
petitions. No costs. Consequently, connected Miscellaneous Petitions are
closed.
(T.S.S., J.) (S.S.K., J.)
07.10.2021
mkn
Internet : Yes
Index : Yes / No
Speaking order / Nonspeaking order
To
1.The Assistant Commissioner (ST)
Central-II Assessment Circle,
Tiruppur – 2.
2.The Commercial Tax Officer,
(Enforcement) Group I,
Coimbatore.
T.S. SIVAGNANAM, J.
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and
SATHI KUMAR SUKUMARA KURUP, J.
mkn
W.A.Nos.2612 to 2617 of 2021
07.10.2021
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