Madras High Court
M/S.Om Sakthi Construction vs The Assistant Commissioner on 6 January, 2023
W.P.No.85 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06.01.2023
CORAM
THE HONOURABLE MR.JUSTICE M.SUNDAR
W.P.No.85 of 2023
and W.M.P.No. 80 of 2023
M/s.Om Sakthi Construction,
Rep. By its Partner .V.Kannan,
No.1, Udayar Street,
Thollamur Village, Earaiyur Post,
Vanur Taluk, Villupuram District,
Pin Code - 604 304. .. Petitioner
Vs
The Assistant Commissioner,
Circle – V, Audit – II Commissionerate,
Office of the Commissionerate of GST
and Central Excise,
No.692, 6th Floor, MHC Complex,
Annasalai, Nandanam,
Chennai – 600 035. .. Respondent
Writ petition filed under Article 226 of the Constitution of
India praying to issue a writ of certiorarified mandamus to call for
for the records relating to the impugned notices of the respondent
dated 30.08.2022 in Ref. No.GADT / CnG / ADT /GST / 6151 / 2022
-Gr 2- CGST - ADTCIR-5-ADT- II-Chennai -I / 891528 / 2022 and
consequential notices dated 23.11.2022 and 22.12.2022 and quash
the same.
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1/13
W.P.No.85 of 2023
For Petitioner : Dr.A.Thiyagarajan
Senior Counsel
for Mr.D.Senthil Kumar
For Respondent : Mr.V.Sundareswaran
Sr.Panel Counsel (GST)
ORDER
In the captioned writ petition, Dr.A.Thiyagarajan, learned
senior counsel instructed by Mr.D.Senthil Kumar counsel on record
for writ petitioner and Mr.V.Sundareswaran, learned senior panel
counsel (GST) on behalf of the lone respondent are before this
Court.
2. This order has to be read in conjunction with and
in continuation of earlier proceedings made in the previous listing
on 04.01.2023 which reads as follows:
'In the captioned writ petition,
Dr.A.Thiyagarajan, learned Senior Advocate
instructed by Mr.D.Senthilkumar, counsel on record
for writ petitioner is before this Court.
2. Learned Senior counsel submits that the
captioned matter arises under 'Tamil Nadu Goods
and Services Act, 2017 (Act 19 of 2017)'
[hereinafter 'TN-G & ST Act' for the sake of
convenience]; that 'notice dated 30.08.2022 bearing
reference DIN-20220859XS0000222CD3'
[hereinafter 'I impugned notice' for the sake of
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W.P.No.85 of 2023
convenience and clarity] followed by a 'notice dated
23.11.2022 bearing reference
DIN:20221159XS000000009E' [hereinafter 'II
impugned notice' for the sake of convenience and
clarity] and another 'notice dated 22.12.2022
bearing reference DIN:20221259XS000000D864'
[hereinafter 'III impugned notice' for the sake of
convenience and clarity] have been called in
question; that vide I impugned notice, lone
respondent had intimated the writ petitioner that it
has been decided to undertake audit of books and
records of writ petitioner for the Financial Years July
2017 to March 2020 under Section 65 of TN-G & ST
Act; that the writ petitioner responded to the same
by way of a reply dated 10.09.2022 inter alia saying
that writ petitioner is already facing proceedings
pursuant to a 'Show Cause Notice' ['SCN'] dated
18.10.2022 bearing reference DIN-
202210DSS20000222D05' [hereinafter 'said SCN' for
the sake of convenience and clarity]; that
notwithstanding such reply, II impugned notice and
III impugned notice have been issued emphasising
that Section 65 audit proceedings are to be
conducted.
3. Learned Senior counsel submitted that
post I impugned notice and reply of writ petitioner
dated 10.09.2022, said SCN dated 18.10.2022
under Section 74 of C-G & ST Act read with Rule
142(2) of C-G & ST Rules has been issued,
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W.P.No.85 of 2023
proceedings are under way, therefore, II and III
impugned notices do not have legs to stand.
4. It is the specific case of learned senior
counsel for writ petitioner that an audit under
Section 65 of C-G & ST and proceedings pursuant to
a SCN under Section 74 read with Rule 142 (1) of C-
G & ST Rules thereunder cannot proceed
simultaneously. In support of his contention,
learned Senior counsel pressed into service an order
dated 30.09.2022 made in R.P.Buildcon Private
Limited & Anr. Vs. The Superintendent & 10 Ors
by a Division Bench of Hon'ble Calcutta High Court.
To be noted, in R.P.Buildcon case Section 65 audit
was commenced when Section 74 legal drill was
under way. In other words, R.P.Buildcon is a
reverse situation on facts qua case on hand.
5. Mr.V.Sundareswaran, learned Senior
Panel counsel accepted notice for lone respondent
and requested for a short accommodation to get
instructions and revert to this Court.
6. Registry to show the name of learned
Revenue counsel in the next listing.
7. List in the Admission Board day-after-
tomorrow. List on 06.01.2023.'
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W.P.No.85 of 2023
3. To be noted a typographical/secretarial error has
crept in qua aforementioned earlier proceedings dated 04.01.2023
in paragraph 2, the date of the reply is not 10.09.2022 but it is
22.11.2022. Therefore, the aforementioned proceedings shall be
read accordingly.
4. In the aforementioned backdrop, learned
Revenue counsel submitted on instructions that the R.P.Buildcon
case made by a Honourable Division Bench of Calcutta High Court
does not come to the aid of the writ petitioner for two reasons, one
reason is that in that case, it has been made clear that if any other
material is required by the Department for the assessment period
it is open to the Department to put the dealer/assessee on notice.
This is captured in paragraph 10 is learned Revenue counsel's say.
The second reason is R.P.Buildcon is distinguishable on facts as in
that case Section 65 audit had commenced when Section 74 legal
drill was underway.
5. Learned senior counsel for writ petitioner
pressed into service two more case laws. One is S.M.Overseas
Pvt. Ltd., Vs. Commissioner of Income Tax reported in (2023)
450 ITR 1 (SC) and the other is Sonam Berlia Vs. State of
Odisha reported in MANU/OR/0306/2021 being the judgment
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W.P.No.85 of 2023
rendered by a Honourable Division Bench of the Orissa High
Court.
6. Before discussion of aforementioned case laws
qua factual matrix of the case on hand, it is necessary to record
the chronicle. The chronicle is that inspection and seizure of
documents was on 16.03.2020, the first impugned notice (Section
65 of 'Tamil Nadu Goods and Services Act, 2017 (Act 19 of 2017)'
[hereinafter 'TN-G & ST Act' for the sake of convenience] is dated
30.08.2022, 'show cause notice' ('SCN' for the sake of convenience
and clarity) is dated 18.10.2022, reply to the SCN is dated
22.11.2022, second and third impugned notices are dated
23.11.2022 and 27.12.2022. In this backdrop, learned senior
counsel submits that audit under Section 65 TN-G & ST Act has to
necessarily culminate in Section 74 of C-G & ST Act. In the case on
hand, before discussing the aforementioned case laws, this writ
Court based upon the ratio nay declaration of law made by
Honourable Supreme Court in Padma Sundara Rao case [Padma
Sundara Rao Vs. State of Tamil Nadu reported in (2002) 3 SCC
533] reminds itself factual matrix qua precedents is significant,
most relevant paragraph in Padma Sundara Rao is paragraph 9
and the same reads as follows:
'9.Courts should not place reliance on
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W.P.No.85 of 2023
decisions without discussing as to how the factual situation
fits in with the fact situation of the decision on which
reliance is placed. There is always peril in treating the
words of a speech or judgment as though they are words in
a legislative enactment, and it is to be remembered that
judicial utterances are made in the setting of the facts of a
particular case, said Lord Morris in Herrington v. British
Railways Board [(1972) 2 WLR 537 : 1972 AC 877 (HL)
[Sub nom British Railways Board v. Herrington, (1972) 1
All ER 749 (HL)]] . Circumstantial flexibility, one
additional or different fact may make a world of difference
between conclusions in two cases.'
7. As regards the S.M.Overseas case law rendered
by Honourable Supreme Court, that arises under the Income Tax
Act and that is a case where re-assessment proceedings were
initiated when rectification proceedings were pending and there
was no material to demonstrate that the rectification proceedings
were withdrawn. In this fact setting, considering the scheme of the
two statutes and the factual distinction, this writ Court has no
hesitation in coming to the conclusion that S.M.Overseas case does
not come to the aid of the writ petitioner. As regards the Sonam
Berlia case, the factual matrix thereat makes it clear that a
separate order had been made under Section 74(9) of OGST Act
and thereafter a show cause notice was issued. Therefore, Sonam
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W.P.No.85 of 2023
Berlia case also is clearly distinguishable on facts and does not
come to the aid of the writ petitioner. A careful perusal of Sonam
Berlia brings to light that it is a reverse situation qua the facts of
the case on hand and there is no difficulty in accepting the
submission of learned Revenue counsel that in R.P.Buildcon case,
Honourable Division Bench of the Calcutta High Court has made it
clear that it is open to the Department to put the assessee on
notice if further materials are required.
8. In this backdrop, learned senior counsel for writ
petitioner emphasises that documents have already been
recovered by the Department and this is articulated in paragraph 3
of the SCN dated 18.10.2022 which reads as follows:
'3.SUBMISSION OF DOCUMENTS
The following documents had been
recovered/obtained during the course of the search
and further course of the investigation.
i.Sample copies of the Letter of
Acceptance (LOA)/Work-order as awarded
by various departments under Government
of Tamil Nadu. (RUD-1)
ii.Copy of the payment
bills/Running Account Bills raised by various
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W.P.No.85 of 2023
departments under the Government of Tamil
Nadu wherein, work was completed in the
pre-GST era and payment received after
01.07.2017 and invariably the taxpayer had
declared such works contract services under
Exempted/NIL rated supplies in the periodic
GSTR 3B returns. (RUD 2)
iii.Income Tax Returns along with
Audited Financials for the FY 2017-18, FY
2018-19, FY 2019-20 and FY 2020-21. (RUD
3)
iv.Copies of Form-26AS for the FY
2017-18, FY 2018-19, FY 2019-20 and
2020-21. (RUD 4)
v.Bank account statement of the
taxpayer for the period 01.07.2017 to
01.03.2020.'
9. Learned Revenue counsel submits that
paragraph 3 lists out documents that were recovered and the
documents now sought for are different. This writ Court refrains
itself from expressing any opinion on the same.
10. This Court carefully considered the rival
submissions in the light of the fact situation of the case on hand.
On such consideration, this writ Court is of the considered view
that the writ petition does not cut ice or pass muster, it can only
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W.P.No.85 of 2023
be dismissed and the reasons are as follows:
(a) The inspection was on
16.03.2020 and the first impugned notice was
issued on 30.08.2022 this being a notice qua
audit under Section 65 of TN-G & ST Act , the
SCN dated 18.10.2022 was issued thereafter.
Therefore, the SCN qua Section 74 of C-G & ST
Act is post notice for audit under Section 65.
This by itself douses the primary argument of
the writ petitioner;
(b) The case laws pressed into
service by the writ petitioner do not come to
the aid of the writ petitioner in the case on
hand as they are factually distinguishable on
facts as already alluded to/delineated supra;
(c) It is well open to the writ
petitioner to make it clear that the documents
have already been submitted and that the same
has been articulated/captured in the show
cause notice itself vide paragraph 3 of the SCN
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W.P.No.85 of 2023
(extracted and reproduced supra). Therefore,
there is neither prejudice to the writ petitioner
nor any illegality;
(d) The argument that Section
65 lead to Section 74 does not really make any
headway qua writ Court owing to the chronicle
which has been set out supra. The chronicle
itself will make it clear that the inspection was
followed by notice qua Section 65 audit and
thereafter show cause notice came to be
issued.
11. In the light of what has been alluded to earlier,
it is delineated and made clear that there is nothing to
demonstrate that when the audit under Section 65 has been kick
started by way of a notice, show cause notice under section 74 is
impermissible. Therefore, it is not necessary to even dilate on the
principles governing interference by a writ Court qua show cause
notice.
12. The argument predicated on subsection 7 of
Section 65 also pales into insignificance in the light of the chronicle
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W.P.No.85 of 2023
as Section 65 has preceded Section 74 in the case on hand.
13. Sequiter is, captioned writ petition fails and the
same is dismissed. Consequently captioned WMP is also dismissed.
There shall be no order as to costs.
06.01.2023
Index : Yes/No
Neutral Citation : Yes/No
mmi
To
The Assistant Commissioner,
Circle – V, Audit – II Commissionerate,
Office of the Commissionerate of GST
and Central Excise,
No.692, 6th Floor, MHC Complex,
Annasalai, Nandanam,
Chennai – 600 035.
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W.P.No.85 of 2023
M.SUNDAR,J.,
mmi
W.P.No.85 of 2023
06.01.2023
https://www.mhc.tn.gov.in/judis
