Madras High Court
Surya Club vs The Deputy State Tax Officer on 2 March, 2023
W.P. (MD) No. 4326 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 02.03.2023
CORAM
THE HON'BLE MR. JUSTICE P.D. AUDIKESAVALU
W.P. (MD) No. 4326 of 2023
and
W.M.P. (MD) No. 4080 of 2023
Surya Club,
Rep.by its Secretary G.Jayakumar,
S/o.Gopalsamy,
No.2/550/I, North Middle Street,
Alagammal Nagar, Sithurajapuram Village,
Sivakasi-626 189,
Virudhunagar District. ... Petitioner
Vs.
The Deputy State Tax Officer-1,
Office of the Assistant Commissioner (ST),
Sivakasi-2, Assessment Circle,
Sivakasi-626 124,
Virudhunagar District. ... Respondent
PRAYER: Petition filed under Article 226 of the Constitution of India, for issue
of Writ of Certiorari, calling for the records pertaining to the impugned notices
1/9
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W.P. (MD) No. 4326 of 2023
issued by the respondent in VAT:33606503791/2018-29, VAT:
33606503791/2019-20, VAT:33606503791/2020-21, VAT:
336006503791/2021-22, VAT:33606503791/Apr 2022-June 2022 dated
08.12.2022 and quash the same.
For Petitioner : Mr. K.Gokul
For Respondent : Mr. K.S.Selvaganesan
Additional Government Pleader
ORDER
Heard Mr. K.Gokul, Learned Counsel appearing for the Petitioner and
Mr. K.S.Selvaganesan, Learned Additional Government Pleader, who takes notice
for the Respondent and perused the materials placed on record, apart from the
pleadings of the parties.
2. The Writ Petition challenges the notices dated 08.12.2022 issued by the
Respondent, which are evidently notices calling for objections, if any, from the
Petitioner for the proposal to levy tax under the Tamil Nadu Value Added Tax Act,
2006 (hereinafter referred to as 'the TNVAT Act' for short).
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W.P. (MD) No. 4326 of 2023
3. It is the case of the Petitioner that in view of the doctrine of mutuality, the
supply of liquor to the members of its club would not amount to a transaction of
sale of goods from one person to another attracting taxation under the TNVAT
Act, placing reliance on the decision of the Hon'ble Supreme Court of India in
State of West Bengal -vs- Calcutta Club [(2019) 19 SCC 107], where it has been
held as follows:-
“52.1 The doctrine of mutuality continues to be applicable to
incorporated and unincorporated members' clubs after the 46th
Amendment adding Article 366(29-A) to the Constitution of India.
52.2 CTO-vs-Young Men's Indian Assn. [(1970) 1 SCC 462] and
other judgments which applied this doctrine continue to hold the
field even after the 46th Amendment.
52.3 Sub-clause (f) of Article 366(29-A) has no application to
members' clubs.”
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W.P. (MD) No. 4326 of 2023
4. The consistent legal position has been reiterated by the Hon’ble Supreme
Court of India in Union of India -vs- Kunisetty Satyanarayana [(2006) 12 SCC
28] that a charge memo or show cause notice cannot be challenged before the
completion of enquiry and the proceedings cannot be interdicted till it reaches its
logical conclusion. It would be useful here to extract the relevant passages from
the said decision which read as follows:-
“13. It is well settled by a series of decisions of this Court that
ordinarily no writ lies against a charge sheet or show-cause notice
vide Executive Engineer, Bihar State Housing Board -vs-
Ramdesh Kumar Singh [JT 1995 (8) SC 331], Special Director
-vs- Mohd. Ghulam Ghouse (AIR 2004 SC 1467), Ulagappa -vs-
Divisional Commissioner, Mysore [2001(10) SCC 639[, State of
U.P. -vs- Brahm Datt Sharma (AIR 1987 SC 943) etc.
14. The reason why ordinarily a writ petition should not be
entertained against a mere show-cause notice or charge-sheet is
that at that stage the writ petition may be held to be premature. A
mere charge-sheet or show-cause notice does not give rise to any
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W.P. (MD) No. 4326 of 2023
cause of action, because it does not amount to an adverse order
which affects the rights of any party unless the same has been
issued by a person having no jurisdiction to do so. It is quite
possible that after considering the reply to the show-cause notice or
after holding an enquiry the authority concerned may drop the
proceedings and/or hold that the charges are not established. It is
well settled that a writ lies when some right of any party is
infringed. A mere show-cause notice or charge-sheet does not
infringe the right of any one. It is only when a final order imposing
some punishment or otherwise adversely affecting a party is passed,
that the said party can be said to have any grievance.
15. Writ jurisdiction is discretionary jurisdiction and hence such
discretion under Article 226 should not ordinarily be exercised by
quashing a show-cause notice or charge sheet.
16. No doubt, in some very rare and exceptional cases the High
Court can quash a charge-sheet or show-cause notice if it is found
to be wholly without jurisdiction or for some other reason if it is
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W.P. (MD) No. 4326 of 2023
wholly illegal. However, ordinarily the High Court should not
interfere in such a matter.”
Having due regard to the aforesaid legal position, as there is nothing which
precludes the Petitioner from raising the contentions in this Writ Petition in the
reply to be submitted to the Respondent, who is bound to deal with the same
before coming to any ultimate conclusion, there is no necessity for the Court to
interfere at this pre-mature stage of the matter.
5. In such circumstances, without expressing any view on the merits of the
controversy involved in the matter, the Writ Petition is disposed on the following
terms:-
(i) it shall be incumbent upon the Petitioner to submit its explanation to the
show cause notice, which is impugned in the Writ Petition, if not done
already, to the concerned authority by 30.04.2023;
(ii) in the event of not being satisfied with the explanation submitted by the
Petitioner, an enquiry shall be conducted following the prescribed
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W.P. (MD) No. 4326 of 2023
procedure after affording full opportunity of personal hearing to the
Petitioner to explain its position in that regard and a reasoned order shall be
passed dealing with each of the contentions raised on merits and in
accordance with law and the decision taken communicated under written
acknowledgment;
(iii) if any adverse decision is taken, the Petitioner may pursue legal remedies in
accordance with law;
(iv) consequently, the connected Miscellaneous Petitions are closed; and
(v) there shall be no order as to costs.
02.03.2023
NCC : Yes/No
Index: Yes/No
ta
Note: Issue order copy by 08.05.2023.
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W.P. (MD) No. 4326 of 2023
To
The Deputy State Tax Officer-1,
Office of the Assistant Commissioner (ST),
Sivakasi-2, Assessment Circle,
Sivakasi-626 124,
Virudhunagar District.
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W.P. (MD) No. 4326 of 2023
P.D. AUDIKESAVALU, J.
ta
W.P. (MD) No. 4326 of 2023
02.03.2023
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