Madras High Court
M/S.Vadivel Pyro Works vs The State Tax Officer (St) (Fac) on 26 July, 2023
W.P.(MD)Nos.11143 to 11145 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 26.07.2023
CORAM
THE HONOURABLE MRS.JUSTICE S.SRIMATHY
W.P.(MD)Nos.11143 to 11145 of 2023
and
W.M.P.(MD)Nos.9730 to 9732 of 2023
M/s.Vadivel Pyro Works,
represented by its Partner
A.Vasantha Vikash,
No.8/217, G, NA, Sathur Road,
Viswanatham Panchayat,
Anuppankulam – 626 189,
Virudhunagar District. ... Petitioner in all cases
vs.
The State Tax Officer (ST) (FAC),
Sattur II Assessment Circle,
Commercial Tax Buildings,
Sattur, Virudhunagar District. ... Respondent in all cases
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W.P.(MD)Nos.11143 to 11145 of 2023
PRAYER in W.P.(MD)No.11143 of 2023: Writ Petition filed under
Article 226 of the Constitution of India for issuance of Writ of
Certiorarified Mandamus, to call for the records in assessment orders
issued by the respondent in GSTIN 33AAKFV8790Q1Z2/ 2017-18,
dated 10.12.2022, GSTIN 33AAKFV8790Q1Z2/ 2017-18, dated
30.11.2022 and consequential proceedings, dated 01.03.2023, in
Reference No.ZD330323004367U and to quash the same as illegal,
arbitrary and in violation of the principles of natural justice and to direct
the respondent to pass assessment order afresh after affording an
opportunity of being heard by considering the reply/ representation,
dated 24.02.2023, filed by the petitioner within such time as may be
directed by this Court.
PRAYER in W.P.(MD)No.11144 of 2023: Writ Petition filed under
Article 226 of the Constitution of India for issuance of Writ of
Certiorarified Mandamus, to call for the records in assessment orders
issued by the respondent in GSTIN 33AAKFV8790Q1Z2/ 2018-19,
dated 10.12.2022, GSTIN 33AAKFV8790Q1Z2/ 2018-19, dated
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W.P.(MD)Nos.11143 to 11145 of 2023
30.11.2022 and consequential proceedings, dated 01.03.2023, in
Reference No.ZD3303230045117 and to quash the same as illegal,
arbitrary and in violation of the principles of natural justice and to direct
the respondent to pass assessment order afresh after affording an
opportunity of being heard by considering the reply/ representation,
dated 24.02.2023, filed by the petitioner within such time as may be
directed by this Court.
PRAYER in W.P.(MD)No.11145 of 2023: Writ Petition filed under
Article 226 of the Constitution of India for issuance of Writ of
Certiorarified Mandamus, to call for the records in assessment orders
issued by the respondent in GSTIN 33AAKFV8790Q1Z2/ 2019-20,
dated 10.12.2022, GSTIN 33AAKFV8790Q1Z2/ 2019-20, dated
30.11.2022 and consequential proceedings, dated 01.03.2023, in
Reference No.ZD3303230045117 and to quash the same as illegal,
arbitrary and in violation of the principles of natural justice and to direct
the respondent to pass assessment order afresh after affording an
opportunity of being heard by considering the reply/ representation,
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W.P.(MD)Nos.11143 to 11145 of 2023
dated 24.02.2023, filed by the petitioner within such time as may be
directed by this Court.
In all cases:
For Petitioner : Mr.S.Karunakar
For Respondent : Mr.B.Saravanan
Additional Government Pleader
*****
COMMON ORDER
These writ petitions are filed challenging the assessment order,
dated 10.11.2022 and rectification order, dated 30.11.2022 and the
consequential proceedings, dated 01.03.2023. The writ petition in W.P.
(MD)No.11143 of 2023 is filed for the assessment year 2017-2018, W.P.
(MD)No.11144 of 2023 is filed for the assessment year 2018-2019 and
W.P. (MD)No.11145 of 2023 is filed for the assessment year 2019-2020.
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W.P.(MD)Nos.11143 to 11145 of 2023
2. The petitioner is the manufacturer and trader of fireworks and is
an assessee under the Tamil Nadu Goods and Service Tax Act, 2017
bearing Registration No. in GSTIN No.33AAFKV8790QIZ2. The
contention of the petitioner is that he used to purchase the raw materials
and packing materials for manufacturing of fireworks from registered
dealers within the State as well from outside the State. After
manufacturing the fireworks, the petitioner sends the same to the
registered dealers within the State and also to the registered dealers
outside the State. The petitioner is paying the GST by filing monthly
returns without default.
3. For the assessment year 2017-2018, 2018-2019 and 2019-2020
the Assistant Commissioner (ST)-2, Tuticorin visited for statutory audit
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W.P.(MD)Nos.11143 to 11145 of 2023
and has forwarded his audit observation, dated 20.12.2021 and the
petitioner has submitted reply on 24.01.2021, along with relevant
records. On the basis of the audit report from the Assistant Commissioner
(ST)-2, Tuticorin, the respondent had issued a show cause notice, dated
25.08.2022, in Form GST DRC 01 followed by Notices in ASMT-10
dated 23.06.2022 and Form DRC 01A, dated 27.07.2022, with a proposal
to levy GST on other expenses, employees benefits expenses and
expenses to creditors, Reversal of ITC on Trades Payable, Reversal of
ITC for non-production of inward supply invoices.
4. With the above proposal, the respondent proposed to levy tax,
penalty and interest under Sections 50(1), 125 and 73(9) of TNGST Act,
2017. On receipt of the show cause notice, dated 25.08.2022, the
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W.P.(MD)Nos.11143 to 11145 of 2023
petitioner had filed a representation, dated 22.09.2022, requesting to
grant time till 17.10.2022, citing various problems. Again, considering
the difficulty in tracing out the records, the petitioner submitted another
representation, dated 11.10.2022, seeking further 30 days.
5. The contention of the petitioner is that the person who had
managed the day-to-day affairs of GST matters was on medical leave. In
the absence of the said person, he was not able to gather and collect all
the records in time. The petitioner again filed 3rd representation, dated
09.11.2022 and prayed for 15 days to give an effective reply. Since
voluminous records were involved in the present matters, the petitioner
was under the bonafide impression that the respondents would grant time
for further 10 days. However, the respondents the very next day has
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W.P.(MD)Nos.11143 to 11145 of 2023
passed an order, dated 10.11.2022, by confirming all the proposals and
levied tax, interest and penalty which is more than one Crore rupees.
Thereafter to rectify the miscalculation of interest an order dated
30.11.2022 was passed. The petitioner filed petitions under section 161
for rectification of the assessment order and the same was rejected vide
order dated 01.03.2023. Aggrieved over the above three orders the
petitioner has filed the present writ petition.
6. The respondent has filed a counter affidavit stating that based on
the audit objection, copy of the report was given to the petitioner and
directed him to submit his objections and the petitioner has submitted his
objections, dated 24.01.2022, but without supporting records to audit
officers. On the basis of the audit report in Form ADT-02, dated
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W.P.(MD)Nos.11143 to 11145 of 2023
25.04.2002, the respondent issued notices in ASMT-10, dated 28.02.2022
and 23.06.2022. Thereafter, a show cause notice, dated 27.07.2022, in
Form GST DRC-01A and Form DRC -01, dated 25.08.2022 was
generated electronically and served through e-mail of the petitioner. The
continuous follow up actions of the adjudicating officer on the matter
was carried out and the respondent has elaborately narrated the same in
the counter. In spite of several adequate opportunities for more than three
times, the petitioner has not submitted any evidence which were pointed
out in the audit objection. Therefore, left with no other option, the
respondent has proceeded to pass the assessment order. The respondent
further relied on proviso to Section75(5) wherein it is stated that no
adjournments shall be granted for more than three times to a person
during the proceedings. Therefore, the respondents could not give
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W.P.(MD)Nos.11143 to 11145 of 2023
further time and proceeded with the assessment order. Subsequently, the
petitioner submitted a petition under Section 161 for rectification of the
order. The said section is granted only to correct the errors apparent on
the face of the record. The petitioner under the guise of submitting
rectification is seeking to re-do the entire assessment order which is not
admissible. Therefore, the respondent vehemently objected to the
rectification petition as well as to interfere with the assessment order.
7. Heard Mr.S.Karunakar, learned Counsel appearing for the
petitioner in all the writ petitions and Mr.B.Saravanan, learned
Additional Government Pleader appearing for the respondent in all the
writ petitions and perused the records.
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W.P.(MD)Nos.11143 to 11145 of 2023
8. The contention of the petitioner is that on 10.11.2022 at about
09.19 AM, the petitioner has submitted an adjournment letter and the
respondent has received the same. But on the same date, i.e., on
10.11.2022 by 01.22 PM, the respondent has passed the assessment order
without considering the adjournment letter presented by the petitioner.
The respondent submitted that since the petitioner was granted three
opportunities, as per Section 73, the respondent is not empowered to
grant further adjournment, therefore, the respondent did not consider the
adjournment letter and proceeded to pass the assessment order.
9. On perusal of the assessment order, it is seen that the respondent
has not recorded the said adjournment letter at all. Even though the
respondent is not empowered to grant further adjournment, the
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W.P.(MD)Nos.11143 to 11145 of 2023
respondent ought to have recorded the adjournment letter submitted by
the petitioner, reject the same and thereafter ought to have passed an
order. But the respondents failed to do so.
10. The petitioner in the earlier adjournment letter has submitted
that since it is a voluminous transaction for three years and the person
who was handling the GST records was on medical leave, the petitioner
was not able to collect all the records in time and hence sought an
adjournment. Even the respondent accepts that the assessment order was
passed and a huge tax liability is fixed on the petitioner. It is an admitted
fact that the voluminous transaction was involved, then the petitioner
ought to be granted one more opportunity. Even though the respondents
have no power to grant adjournment, this Court has power to direct the
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W.P.(MD)Nos.11143 to 11145 of 2023
respondents to grant one more opportunity by taking into the fact of
voluminous transaction. Therefore, this Court is of the considered
opinion that the petitioner is entitled to one more opportunity.
11. It is seen the petitioner filed a rectification petition under
Section 161. Before filing the rectification petition, the petitioner
collected all the records and filed the rectification petition along with the
records. This would indicate that the petitioner was bonafide in seeking
time to furnish all the records. If the petitioner has filed the rectification
petition without any records, the claim of the respondent ought to be
accepted, but in the present case it is for the genuine reason the petitioner
has sought for adjournment. Therefore, this Court is of the considered
opinion that the petitioner is entitled to one more opportunity.
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W.P.(MD)Nos.11143 to 11145 of 2023
12. In the present case, the petitioner has submitted a rectification
petition along with the records as well as pointed out several
discrepancies such as the respondent has not granted ITC claim wherever
it is applicable and imposed tax on the certain expenses. The petitioner
has relied on the proviso to section 161 and submitted that before passing
any orders under the section 161 then opportunity should be granted to
the assessee and the relevant section is extracted hereunder:
“Without prejudice to the provisions of section 160, and
notwithstanding anything contained in any other provisions of
this Act, any authority, who has passed or issued any decision or
order or notice or certificate or any other document, may rectify
any error which is apparent on the face of record in such decision
or order or notice or certificate or any other document, either on
its own motion or where such error is brought to its notice by any
officer appointed under this Act or an officer appointed under the
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W.P.(MD)Nos.11143 to 11145 of 2023
State Goods and Services Tax Act or an officer appointed under
the Union Territory Goods and Services Tax Act or by the
affected person within a period of three months from the date of
issue of such decision or order or notice or certificate or any
other document, as the case may be:
Provided that no such rectification shall be done after a period of
six months from the date of issue of such decision or order or
notice or certificate or any other document:
Provided further that the said period of six months shall not
apply in such cases where the rectification is purely in the nature
of correction of a clerical or arithmetical error, arising from any
accidental slip or omission:
Provided also that where such rectification adversely affects any
person, the principles of natural justice shall be followed by the
authority carrying out such rectification.”
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W.P.(MD)Nos.11143 to 11145 of 2023
13. The learned Counsel for the petitioner relied on the judgment
of this Court passed in the case of Pinstar Automotive India Private
Limited Vs. Additional Commissioner, in W.P.No.8493 of 2023, dated
20.03.2023, reported in 2023(3) TMI 1168, wherein it is held the
procedure followed by the authority is clearly contrary to the third
proviso to section 161, where the authority proposed to take a view
adverse to the applicant due process must be followed. In the present
case the respondent had declined to grant ITC in certain cases as stated
supra for want of documents. Hence the petitioner filed rectification
petition, if any order is passed the same would adversely affect the
petitioner, hence the respondent is bound to grant an opportunity.
14. In the present case, while passing the rectification order, the
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W.P.(MD)Nos.11143 to 11145 of 2023
respondent has not followed the proviso stated under Section 161.
Therefore, following the above said order, this Court is also of the
considered opinion that before passing the order under Section 161, the
respondent should have followed the proviso and granted personal
hearing to the petitioner. Therefore, while passing the rectification order
there is violation of principles of natural justice.
15. Therefore, the impugned orders are set aside. However, since
the tax liability is huge, the State cannot be made to suffer by the attitude
of the petitioner as well. Therefore, in the interest of justice, the
petitioner is directed to pay Rs.1,00,000/- (Rupees One Lakh only) for
each year. On such deposit, the respondent shall re-do the assessment.
The petitioner shall not take further adjournments. The petitioner is at
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W.P.(MD)Nos.11143 to 11145 of 2023
liberty to submit all the records and raise the pleas before the Assessing
Officer and the assessment shall be completed within a period of six
weeks from the date of deposit.
16. With the above said observation, the writ petitions are allowed.
No costs. Consequently, connected miscellaneous petitions are closed.
Index : Yes / No 26.07.2023
Internet : Yes
NCC : Yes / No
Tmg
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W.P.(MD)Nos.11143 to 11145 of 2023
To
The State Tax Officer (ST) (FAC),
Sattur II Assessment Circle,
Commercial Tax Buildings,
Sattur, Virudhunagar District
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W.P.(MD)Nos.11143 to 11145 of 2023
S.SRIMATHY, J
Tmg
W.P.(MD)Nos.11143 to 11145 of 2023
26.07.2023
https://www.mhc.tn.gov.in/judis
