Madras High Court
M/S. All India Metal And Alloys vs The Assistant Commissioner on 8 September, 2021
W.A.Nos. 2222, 2226, 2229 & 2242 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 08.09.2021
CORAM
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Mr.Justice SATHI KUMAR SUKUMARA KURUP
WA.Nos. 2222, 2226, 2229 and 2242 of 2021
M/s. All India Metal and Alloys
Represented by its Proprietor
No.17, Singanna Naicken Street
First Floor, Chennai – 600 001. .. Appellant in all WPs
-vs-
The Assistant Commissioner
Harbour-IV Assessment Circle
Chennai. .. Respondent in all WPs
COMMON PRAYER :: Writ Appeals filed under Clause 15 of Letters
Patent, praying to set aside Common order dated 15.06.2021 made in
W.P.Nos. 9286 to 9289 of 2014 and 18022 to 18025 of 2016 on the file of
this Hon'ble Court.
For Appellant : Mr. P.Rajkumar (for all Wps)
For Respondent : Mr. M.Venkateswaran (for all Wps)
Government Advocate
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COMMON JUDGME NT
(Delivered by T.S.Sivagnanam, J.)
These Appeals have been filed by the Writ Petitioner challenging the
common order in W.P. Nos. 9286 to 9289 of 2014 and 18022 to 18025 of
2016 dated 15.06.2021.
2. The Writ Petitions were filed challenging the assessment orders
passed by the Respondent under the provisions of the Tamilnadu Value
Added Tax Act, 2006 [hereinafter referred to as 'the TNVAT' for short]
dated 26.02.2014, 26.02.2014, 27.02.2014 and 27.02.2014 for the
Assessment Years 2009-10, 2010-11, 2011-12 and 2012-13 respectively.
3. The Appellants primarily challenged the assessment orders on the
ground of violation of principles of natural justice in as much as the
documents and details sought for by the Appellant have not been furnished.
The Appellant, therefore, sought for a consequential direction upon quashing
the assessment orders to provide copies of the documents / details requested
by them in their letters dated 18.11.2013 and 06.12.2013 and thereafter, to
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proceed to pass an order in accordance with law. The Learned Writ Court
has dismissed the Writ Petitions, solely on the ground of availability of
alternate remedy. In this regard, certain decisions have been referred, to
support the conclusion arrived at by the Learned Writ Court that the
Appellant is bound to exhaust the statutory appellate remedy as provided
under the TNVAT Act. Therefore, liberty was granted to the Appellant to
file an Appeal or Revision by following the procedures under the TNVAT
Act. The Appellate Authority was also directed to condone the delay, if there
is any delay in filing Appeal/Revision. Thus, the question, which falls for
consideration, is whether the availability of an alternative remedy is an
absolute bar for entertaining the Writ Petitions. As pointed out earlier, the
Learned Writ Court had relied upon certain decisions of the Hon'ble
Supreme Court to state that the Appellant is bound to exhaust the alternative
remedy available under the TNVAT Act.
4. In a recent decision of the Hon'ble Supreme Court in
Radha Krishnan Industries -vs- State of Himachal Pradesh reported
in [2021 SCC Online SC 334], one of the questions, which fell for
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consideration, is that whether the writ petition challenging the orders of
provisional attachment under the provisions Himachal Pradesh Goods and
Services Tax Act was maintainable, when the Act provides for an alternative
remedy? The Hon'ble Supreme Court first proceeded to decide the
maintainability of the Writ Petition and in paragraph Nos. 24 to 27 of the
judgment it was held as follows :-
“24. We shall now review the position of law on the questions
before us.
C.1 Maintainability of writ petition before the High Court
25. The High Court has dealt with the maintainability of the
petition under Article 226 of the Constitution. Relying on the
decision of this Court in Assistant Commissioner (CT) LTU,
Kakinada v. Glaxo Smith Kline Consumer Health Care
Limited , the High Court noted that although it can entertain
a petition under Article 226 of the Constitution, it must not do
so when the aggrieved person has an effective alternate
remedy available in law. However, certain exceptions to this
“rule of alternate remedy” include where, the statutory
authority has not acted in accordance with the provisions of
the law or acted in defiance of the fundamental principles of
judicial procedure; or has resorted to invoke provisions,
which are repealed; or where an order has been passed in
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violation of the principles of natural justice. Applying this
formulation, the High Court noted that the appellant has an
alternate remedy available under the GST Act and thus, the
petition was not maintainable.
26. In this background, it becomes necessary for this Court,
to dwell on the “rule of alternate remedy” and its judicial
exposition. In Whirlpool Corporation v. Registrar of
Trademarks, Mumbai , a two judge Bench of this Court after
reviewing the case law on this point, noted:
“14. The power to issue prerogative writs under
Article 226 of the Constitution is plenary in nature and
is not limited by any other provision of the Constitution.
This power can be exercised by the High Court not only
for issuing writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari
for the enforcement of any of the Fundamental Rights
contained in Part III of the Constitution but also for
“any other purpose”.
15. Under Article 226 of the Constitution, the
High Court, having regard to the facts of the case, has
a discretion to entertain or not to entertain a writ
petition. But the High Court has imposed upon itself
certain restrictions one of which is that if an effective
and efficacious remedy is available, the High Court
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would not normally exercise its jurisdiction. But the
alternative remedy has been consistently held by this
Court not to operate as a bar in at least three
contingencies, namely, where the writ petition has
been filed for the enforcement of any of the
Fundamental Rights or where there has been a
violation of the principle of natural justice or where
the order or proceedings are wholly without
jurisdiction or the vires of an Act is challenged. There
is a plethora of case-law on this point but to cut down
this circle of forensic whirlpool, we would rely on some
old decisions of the evolutionary era of the
constitutional law as they still hold the field.”
(emphasis supplied)
27. Following the dictum of this Court in Whirlpool (supra),
in Harbanslal Sahnia v. Indian Oil Corpn. Ltd. , this court
noted that:
“7. So far as the view taken by the High Court
that the remedy by way of recourse to arbitration
clause was available to the appellants and therefore the
writ petition filed by the appellants was liable to be
dismissed is concerned, suffice it to observe that the
rule of exclusion of writ jurisdiction by availability of
an alternative remedy is a rule of discretion and not
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one of compulsion. In an appropriate case, in spite of
availability of the alternative remedy, the High Court
may still exercise its writ jurisdiction in at least three
contingencies : (i) where the writ petition seeks
enforcement of any of the fundamental rights; (ii)
where there is failure of principles of natural justice;
or (iii) where the orders or proceedings are wholly
without jurisdiction or the vires of an Act is
challenged. (See Whirlpool Corpn. v. Registrar of
Trade Marks [(1998) 8 SCC 1].) The present case
attracts applicability of the first two contingencies.
Moreover, as noted, the appellants' dealership, which is
their bread and butter, came to be terminated for an
irrelevant and non-existent cause. In such
circumstances, we feel that the appellants should have
been allowed relief by the High Court itself instead of
driving them to the need of initiating arbitration
proceedings.”
The above principles of law laid down by the Hon'ble Supreme Court will
guide us to take a decision in these appeals.
5. The Appellant is a registered dealer on the file of the Respondent
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under the provisions of the TNVAT Act and the Central Sales Tax (CST)
Act, 1956. The assessment for the years under consideration were initially
completed. The place of business of the Appellant was inspected by the
Enforcement Wing Officials on 16.08.2012. During which, certain defects
were alleged to have been found. On the basis of the alleged defects, which
were found during such inspection, the Assessing Officer issued notices
dated 06.11.2013 alleging that the Appellant has wrongly availed Input Tax
Credit ('ITC' for short) on the purchases effected from the Registration
certificate cancelled dealers. The name of the seller, the assessment circle of
the seller, the date of cancellation and the amount of tax were mentioned in a
tabulated format for the relevant assessment years. To be noted that the date
of invoice and invoice numbers were not furnished.
6. The Assessing Officer referred to Section 17 (2) of the TNVAT Act
and stated that for the purpose of claiming ITC, the burden of proving such
claim shall lie on the Appellant-dealer. The Assessing Officer also referred to
Section 19(1) of the TNVAT Act and stated that there shall be ITC of the
amount of tax paid or payable under the TNVAT Act, by the registered
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dealer to the seller on its purchases of taxable goods specified under the
TNVAT Act that the registered dealer, who claims ITC, shall establish that
the tax due on such purchases has been paid by him in the manner
prescribed.
7. Therefore, the Assessing Officer stated that the dealer should pay the
wrong claim of ITC amount availed along with interest as per provisions of
Section 19(15) of the TNVAT Act. Simultaneously, the Appellant dealer was
requested to file their reply with supporting documents within a time frame,
failing which action will be taken to revise the assessment.
8. Though the notices do not specifically mention under which provision
of law they have been issued, the only provision to which the Assessing
Officer can trace his power is under Section 27 of the TNVAT Act. The
Appellant had filed their objections on 18.11.2013 denying the allegations
made in the notices and stating that on the date, when the said purchases
were effected the Registration certificate of the selling dealer was valid, the
taxes were paid on the said purchases and the goods have been delivered by
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the seller to the purchaser.
9. Further, the Appellant pointed out that when the search was made by
them in the official portal of the Sales Tax Department, it showed a different
date of the order of cancellation of the Registration and the Appellant stated
that invariably, it would be a case of retrospective cancellation and therefore,
they requested the Assessing Officer to furnish the following details :-
1. The date of issue of TN Number (Registration) to the
registration cancelled dealers relied on by the
Assessing Officer.
2. Whether the Registering Authority made any verification
of the place of business of the above dealer after the
TIN Number was issued, as per the guidelines issued by
the Commissioner of Commercial Taxes.
3. In case, any verification has been made after issues of
Registration, to find out the genuineness of the
registration cancelled dealer, a Xerox copy of the
verification report of the official who verified, may
please furnished.
4. Whether the registration cancelled dealer has filed
returns, as required under Sec 21 of TNVAT Act from
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the date of issue of Registration till the date of his
cancellation of Registration.
5. In case, the registration cancelled dealer has not filed
any returns both under TNVAT Act / CST Act, what
action the Assessing Authority, has taken to obtain the
returns or to make a best judgment Assessment.
6. Xerox copy of notices, if any issued to the registration
cancelled dealer, to file his returns, wherever, the
dealer fail to file returns.
7. The tax paid and ITC availed as per returns filed by the
registration cancelled dealer may please be furnished
separately, year wise and month wise, in the following
form.
Month Details Amount
and Year
ITC Claimed
Output Sales
Details of purchases noted in
Annexure – I to Form – I
Details of sales noted in
Annexure – II to Form - I
8. The details of declaration forms, such as C-FORM, E-I
or E-II or Form-H issued to the registration cancelled
dealers, year wise.
9. The details of declaration forms, such as C-FORM, E-I
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or E-II or FORM-H forms filed by the registration
cancelled dealer, for his sales under CST Act separately
for each year, from the date of issue of registration.
10.Whether any Assessment order has been passed
accepting the returns filed by the registration cancelled
dealer, under TNVAT Act and CST Act, year wise.
11.In case, Assessment order has been passed, a Xerox
copy of Assessment order passed for each year under
TNVAT Act and CST Act, in respect of the registration
cancelled dealer may please be furnished, year wise.
12.The details of arrears if any due from registration
cancelled dealer may please be furnished separately,
year wise.
13.Whether the Registering Authority, has made any
verification at the place of business of the registration
cancelled dealer, prior to cancellation of his
Registration, as required in Law, and if so with what
result, a Xerox copy the verification report may please
be furnished. Please also state whether the registration
was cancelled as per the provision of Sec 39 (14) and
(15) of TNVAT Act, after giving opportunity for
personal hearing.
14.A Xerox copy of the orders passed by the Registering
Authority, for cancellation of Registration, under
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TNVAT Act and CST Act, in respect of registration
cancellation dealer may please be furnished, as
retrospective cancellation of registration is not valid in
law.
15.Whether the Assessing Authority has made any
Assessment or revision of Assessment in respect of the
turnover reported in the returns for the Assessment
year 2009-2010, even though their registration has
been cancelled with retrospective effect, they have sold
goods actually, covered by proper sale invoice, wherein
TIN No issued by the Department is available, and
collected tax from us. Therefore, the Assessing
Authority should make an Assessment to collect the
taxes, what they have collected from us on sale of the
goods. These details are required along with Xerox
copy of the orders passed by the Assessing Authority,
bringing the taxes involved on the sale invoices, in to
the tax net.
16.A Xerox copy of the application for registration in
Form-A filed before the Assessing Authority for
registration of the business.
17.The details of persons introduced to open Bank
account by the registration cancelled dealer, may
please be furnished with their address.
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18.A Xerox copy of rental agreement filed by registration
cancelled dealer before the Registering Authority may
please given to me at my cost.
19.A Xerox copy of statement recorded from registration
cancelled dealer either at the time of giving registration
or at the time of verification of the place of business
may please be given to me at my cost.
20.Xerox copy of address proof furnished by registration
cancelled dealer, in the registration document may
please be given to me at my cost.
21.Details of Bank Account of registration cancelled
dealer and also the Xerox copy of the bank statement
obtained from the Bank may please be given to me at
my cost.
22.The registration cancelled dealer has issued tax
invoice for the value of the goods including transport
charges and collected VAT. The respective Assessing
Officer having jurisdiction over the registration
cancelled dealer may please be informed to make
Assessment, as per law, up to the tax invoice details
available in Annexure-II, Form-I return. A copy of the
Assessment order passed by the Assessing Officer may
please be furnished to us at our cost.
23.We understand that the registration cancelled dealer
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has filed returns on E-Filing during the months
mentioned in your notice. Whether any Assessment has
been made based on the returns filed by dealer from the
date of registration. If so, a copy of the Assessment
order may please be furnished. If not the reasons for
not making Assessing may please be furnished.
After the above request for production of documents /details, the Appellant
also relied upon various decisions of this Court stating that on account of
mismatch of the details available in the intra-department website cannot be a
reason to revise the earlier Assessment. On receipt of the objections, the
Assessing Officer issued notices dated 03.12.2013, apart from stating that
that the Appellant has effected transaction with Registration certificate
cancelled dealers, a new ground was raised in the notices stating that the
Appellant has not filed proof for physical movement of goods to verify the
genuineness of the transactions. However, the Appellant submitted their
objections dated 06.12.2013 stating that they have requested furnishing of
23 details / documents in their reply dated 18.11.2013 and those details have
not been furnished to the Appellant and in the meantime, the second notices
dated 03.12.2013 have been issued, which are against the principles of
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natural justice.
10. Further, the Appellant stated that they can produce photo-stat copies
of the E-return filed by the selling dealers for the relevant months and
reiterated that the selling dealer’s registration certificate has not been
cancelled and if it is so, how they could have filed the E-return with regard
to the production of Sales Bills, Purchase Bills, Stock statement and Bank
Statement. The Appellant stated that the officer of the Enforcement (North)
Group-III, who inspected the business premises of the Appellant on
16.08.2012, have taken away all the books for checking and returned the
same on 24.08.2012 and the photo-stat copies of the list of books taken by
them was attached for the ready reference of the Assessing Officer and
therefore, stated that the question of producing books once over and again
does not arise.
11. With regard to the non-maintaining of the Stock records as per the
provisions of the TNVAT Act, the Appellant stated that they have already
paid the compounding fee, and on the very same ground, the Appellant
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cannot be penalised for the second time. The Appellant specifically sought
for an opportunity of personal hearing before passing the order to prove that
the transactions are genuine.
12. The Appellant case is that the said objections / reply dated 06.12.2013
was submitted in the office of the Respondent on 09.12.2013 and to that
effect, an acknowledgement was given in the letter delivery book. The
Assessing Officer by orders dated 26.02.2014, 26.02.2014, 27.02.2014 and
27.02.2014 has completed the assessment.
13. Among other things, the Assessing Officer has held that no objection
was filed by the Appellant to the notice dated 03.12.2013 and proceeded to
confirm the proposal of levying penalty as proposed in the revision notices.
Therefore, the Appellant approached the Writ Court stating that there has
been serious violation of principles of natural justice and in such
circumstances, the Appellant is entitled to invoke the remedy under the
Article 226 of the Constitution of India, and that the Writ Petitions were
maintainable.
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14. The Writ Petitions were entertained in the year 2014 and an order of
interim stay was granted, and the order of interim stay continued to be in
force till the disposal of the Writ Petitions vide order dated 15.06.2020.
15. In the light of the recent decision of the Hon'ble Supreme Court as
cited supra, one of the exceptions, which has been drawn, for permitting an
aggrieved person to approach this Court and invoke the extraordinary
jurisdiction of this Court under Article 226 of the Constitution of India,
despite availability of an alternate remedy, is when there is violation of
principles of natural justice. We need not labour much to investigate and
ascertain as to whether the Respondent had received the reply dated
06.12.2013, since the Assessing Officer in the Counter-affidavit filed in the
Writ Petitions has accepted that the reply dated 06.12.2013 was received. If
such is the case, it goes without saying that the Assessment orders dated
26.02.2014, 26.02.2014, 27.02.2014 and 27.02.2014 passed are in violation
of the principles of natural justice. That apart, in the objections given by the
Appellant dated 18.11.2013, apart from pointing that the selling-dealer’s
registration was very much valid, and that they have been filing e-returns,
the Appellant sought for 23 details/documents, which have been listed
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above, and the Assessing Officer does not dispute the fact that he has
received the reply / objections dated 18.11.2013. But without taking note of
the request made by the Appellant, the second notice dated 03.12.2013 has
been issued once again alleging that the Appellant has purchased from the
Registration certificate cancelled dealers and in addition, that the Appellant
has not filed any proof for physical movement of goods the assessments
were completed.
16. Had the Respondent furnished the details / documents sought for by
the Appellant in their reply /objections dated 18.11.2013 or given a reply to
the said communication, with regard to the Appellant entitlement to seek any
of or all of 23 details and documents, it would have been a different matter?
17. However, the Respondent has virtually ignored the reply dated
18.11.2013, wherein the Appellant, apart from giving its preliminary
objections for the revision of assessment, has also sought for certain details
and documents. That apart, there has been a specific request made by the
Appellant in the representation 18.11.2013 to grant an opportunity of
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personal hearing. This has also been brushed aside, while issuing the second
notice dated 03.12.2013. That apart, in the Assessment orders the Assessing
Officer has stated that the Appellant has not furnished any reply to the
second notice, whereas it has been admitted in the Counter-affidavit that the
reply / objections dated 06.12.2013 has been received.
18. Therefore, we are of the clear view that there have been gross violation
of principles of natural justice, which would justify our stand that the
Appellant is entitled to invoke the extraordinary jurisdiction of this Court
and consequently, Writ Petitions are held to be maintainable.
19. For all the above reasons, we are inclined to interfere the common
order passed by the Learned Writ Court and issue certain directions, so that
the assessments can be completed, after complying with the principles of
natural justice.
20. Accordingly, the Writ Appeals are allowed and the orders passed in
the Writ Petitions are set aside and the assessment orders impugned in the
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writ petitions are quashed and these matters are remitted to the Assessing
Officer and the Assessing Officer is directed to issue notice to the Appellant
to appear in-person and during their personal appearance, the Appellant is
directed to submit a further reply, clearly specifying as to what are all
documents and details they would require and on such written request, the
Assessing Officer shall consider and provide copies of the available details/
documents, or if the details and documents are very voluminous, the
representative of the Appellant would be entitled to peruse the details and
documents in the office of the Respondent and after furnishing/ perusal,
within 15 days therefrom, a fresh objection shall be given by the Appellant
to the proposals made in both the notices dated 06.11.2013 and 03.12.2013
and on receipt of the objections, the respondent shall afford opportunity of
personal hearing to the authorised representative of the Appellant and re-do
the assessment in accordance with law.
21. On the above terms, these Writ Appeals are allowed. No costs.
[T.S.S., J.] [S.S.K., J.]
08.09.2021
Sp/Maya
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Index: Yes/ No
Speaking Order : Yes/ No
T.S.Sivagnanam, J.
and
Sathi Kumar Sukumara Kurup, J.
(Sp)
To
The Assistant Commissioner
Harbour-IV Assessment Circle
Chennai.
WA.Nos. 2222, 2226, 2229 & 2242 of 2021
Dated : 08.09.2021
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