Madras High Court
Tvl. Sri Vigneswara Granites vs The Assistant Commissioner (St) on 5 March, 2024
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
W.P.Nos.11916 of 2020 batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.03.2024
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR
RAMAMOORTHY
W.P.Nos.11916, 11921, 11923, 11924, 11926, 11930, 11933, 11934 of
2020 &
WMP Nos.14641,14642,14644,14645,14648,14651,14654 & 14657 of
2020
Tvl. Sri Vigneswara Granites,
Represented by its Partner,
Smt. Shanthi Selvaraj,
No.8/372, Mumoorthi Nagar South,
Pooluvapati Post,
Tiruppur-641 602. ... Petitioner
vs
The Assistant Commissioner (ST),
Tiruppur (Rural-I) Assessment Circle,
Tiruppur. ... Respondent
PRAYER in W.P.No.11916 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2007-08 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
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W.P.Nos.11916 of 2020 batch
PRAYER in W.P.No.11921 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2008-09 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
PRAYER in W.P.No.11923 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2009-10 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
PRAYER in W.P.No.11924 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2010-11 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
PRAYER in W.P.No.11926 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2011-12 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
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W.P.Nos.11916 of 2020 batch
principles of natural justice.
PRAYER in W.P.No.11930 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2012-13 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
PRAYER in W.P.No.11933 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2013-14 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
PRAYER in W.P.No.11934 of 2020: Writ Petition filed under Article
226 of the Constitution of India to issue a writ of Certiorari calling
for the records on the files of the respondent in TIN
33592385094/2014-15 dated 10.03.2020 and quash the same as being
without jurisdiction and authority of law and contrary to the
principles of natural justice.
In all WPs
For Petitioner : Mr.T.Ramesh & P.Rajavelu
For Respondent : Mr.C.Harsha Raj
Additional Govt. Pleader (Taxes)
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W.P.Nos.11916 of 2020 batch
COMMON ORDER
In these writ petitions, assessment orders under the Tamil
Nadu Value Added Tax Act, 2006 (the TNVAT Act) in respect of
assessment years 2007-08 to 2014-15 are under challenge.
2. The petitioner is a partnership firm represented by
Smt.Shanthi Selvaraj. Returns were filed by the petitioner for each of
the above mentioned assessment years. Pursuant to an inspection
undertaken by the enforcement wing officials, the petitioner received
a notice dated 12.08.2016. Such notice dealt with about five defects.
The focal point of challenge is defect No.3 relating to freight not
reported and sold with under value. Upon receipt of the above
mentioned notice, the petitioner submitted a reply dated 30.08.2016.
In the reply, the alleged defect relating to freight was responded to
by stating that freight charges incurred by the petitioner were
accounted for in the books of accounts and that all payments were
made by account payee cheques. It was further stated that the cost of
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W.P.Nos.11916 of 2020 batch
purchase includes the cost of materials, labour charges and delivery
charges at site. The petitioner contended that the computation in
respect of freight charges in the notice under reply is not based on
any material evidence, but entirely based on assumptions and
presumptions. This was followed by a revised notice on 27.08.2018.
Pursuant to a hearing, the orders impugned herein were issued on
05.06.2020.
3. Learned counsel for the petitioner challenges the impugned
assessment orders on two grounds. The first ground of challenge is
that the re-assessment proceedings are barred by limitation as
regards assessment years 2007-08 to 2010-11. By pointing out that
the limitation period is six years in terms of Section 27 of the TNVAT
Act, learned counsel submits that such proceedings could not have
been initiated up to assessment year 2010-11. In this connection, he
relies upon the revised notice dated 27.08.2018. As regards
assessment year 2014-15, learned counsel submitted that there was a
computational error in the assessment order, and, therefore, a
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W.P.Nos.11916 of 2020 batch
rectification petition was filed. Although the computational error was
rectified by order dated 05.06.2020, learned counsel submitted that
the said order also proceeded on the basis of information gathered
from the Internet and not on the basis of credible information
indicating suppression of freight charges by the petitioner. Therefore,
he submits that proceedings relating to assessment orders 2014-15
are also vitiated for the same reasons.
4. The next contention of learned counsel was that the
determination of alleged suppression of freight charges is completely
unreasonable. By referring to the notice dated 12.08.2016, he points
out that the freight charges per consignment with regard to freight
from Gujarat was fixed at Rs.1,00,000/-. Similarly, he pointed out
that freight charges per consignment from Rajasthan was fixed at
Rs.80,000/-. By referring to the impugned order, learned counsel
pointed out that the petitioner stated that he had received about 13
consignments from Gujarat of a value of less than Rs.50,000/- per
consignment. Similarly, he had received six consignments of a value
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W.P.Nos.11916 of 2020 batch
between Rs.50,000/- and Rs.1,00,000/-. By pointing out that the
consignment value was much lower than the freight charges
attributed by the respondent, learned counsel asserted that the
conclusions recorded in the assessment order are absurd and cannot
be sustained. He further submitted that the respondent should have a
reasonable basis for re-assessment when such re-assessment is based
on alleged suppression with intent to evade taxes by the petitioner.
He points out that the assessing officer relied on information
gathered from the Internet to fix the freight charges and compute the
alleged suppression of freight charges by the petitioner. Since
findings were recorded without relying on credible material, learned
counsel submits that these assessment orders are liable to be
quashed.
5. Mr.C.Harsha Raj, learned Additional Government Pleader,
made submissions in reply and to the contrary. With regard to
limitation, learned counsel referred to sub-section 2 of Section 22 of
the TNVAT Act and pointed out that with regard to assessment years
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W.P.Nos.11916 of 2020 batch
2006-07 to 2010-11, deemed assessments occurred on 30.06.2012. If
the six year period is computed from 30.06.2012, learned counsel
submits that the proceedings in respect of all the assessment years
were within the period of limitation since such proceedings were
initiated pursuant to notice dated 12.08.2016. He also points out, in
this regard, that the main basis for re-assessment was the notice
dated 12.08.2006 and not the revised notice dated 27.08.2018.
6. On the merits, Mr.C.Harsha Raj contended that the
assessment orders were issued on best judgment basis because the
petitioner failed to place on record requisite documents to
substantiate that only the disclosed amounts were incurred towards
freight charges. As regards assessment year 2014-15, Mr.Harsha Raj,
learned Additional Government Pleader, submitted that the
suppressed turnover had been determined as Rs.59,31,520/- in the
notice dated 12.08.2016. Based on documents submitted by the
petitioner, he submits that this was reduced to Rs.31,01,417/- and
that after giving credit to the disclosed sum of Rs.17,83,766/, tax was
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W.P.Nos.11916 of 2020 batch
computed on the said sum at Rs.14.5% and the petitioner was
directed to pay a sum of Rs.1,91,059/- along with penalty thereon.
Mr.Harsha Raj points out that the petitioner should have filed similar
rectification petitions in respect of other assessment years, but chose
not to do so. He further submitted that the dispute turns on questions
of fact and that such dispute should be raised before the appellate
authority and not before this Court. Hence, learned counsel submits
that all these writ petitions are liable to be rejected.
7. By way of rejoinder, Mr.Ramesh, learned counsel, submits
that re-assessment proceedings are not to be undertaken on best
judgment basis, except where no returns are filed. He next submitted
that the reply of the petitioner was not taken into consideration while
issuing the impugned assessment orders and that the respondent did
not provide any evidence of actual increased outflow of funds
towards freight charges. Therefore, he reiterated that the impugned
orders call for interference.
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W.P.Nos.11916 of 2020 batch
8. The first issue that falls for consideration is whether
proceedings relating to assessment years 2007-08 to 2010-11 are
barred by limitation. Under Section 27(1) of the TNVAT Act, the
limitation period in respect of escaped assessment is six years from
the date of assessment. Section 22(2) deals with deemed assessment.
The principal clause prescribes that there will be deemed assessment
on the 31st October of the succeeding year to the relevant assessment
year. The proviso thereto deviates from the date of deemed
assessment in the principal clause by prescribing that the date of
deemed assessment shall be 30.06.2012 in respect of assessment years
commencing from 2006-07 and ending with the assessment year
2010-11. The assessment years 2007-08 to 2010-11 are relevant for the
purpose of these cases. All these assessment years fall within the
scope of the proviso to sub-section 2 of Section 22. The contention of
Mr.Ramesh, in this regard, that the proviso is inapplicable cannot be
countenanced because both the principal clause and the proviso deal
with deemed assessment and the entire sub-section applies in all
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W.P.Nos.11916 of 2020 batch
cases where assessment orders were not issued. Admittedly,
assessment orders were not issued in these cases pursuant to returns
being filed. Since the proviso applies to these cases, as regards
assessment years 2007-08 to 2010-11, limitation should be computed
from 01.07.2012. If so computed, the assessments relating to the
above mentioned orders are within the six year period of limitation
because re-assessment proceedings were initiated pursuant to notice
dated 12.08.2016.
9. As regards the challenge on merits, learned counsel for the
petitioner pointed out that the petitioner had paid freight charges
through account payee cheques and that such payments were duly
reflected in the books of accounts of the petitioner. In the impugned
assessment orders, the assessing officer has applied a flat rate per
consignment based on the State from which the consignments were
delivered to the petitioner. For instance, as regards the State of
Gujarat, the freight charges per consignment was fixed at
Rs.1,00,000/-. As regards the State of Rajasthan, it was fixed at
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W.P.Nos.11916 of 2020 batch
Rs.80,000/-. The assessment orders also record the petitioner's
contention that about 13 consignments from Gujarat were of the
value below Rs.50,000/- per consignment. Effectively, the freight
charges determined by the assessing officer were twice the value of
the consignment as regards those 13 consignments. Similarly, the
petitioner has pointed out that six consignments were below the
value of Rs.1,00,000/-. Once again, the freight charges determined by
the assessing officer is slightly more than the value of consignment as
regards these six consignments. These illustrations demonstrate that
the assessing officer did not determine the alleged suppressed freight
charges on a rational basis. Hence, the assessment orders as regards
assessment years 2007-08 to 2013-14 warrant interference.
10. Since the fact situation relating to assessment year 2014-15
differs in some respects, the same is discussed separately. With
regard to this assessment year, the petitioner had filed a rectification
petition which was disposed of by order dated 05.06.2020. In the
notice dated 12.08.2016, the suppressed turnover with regard to
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freight was specified as Rs.89,31,520/-. As against this, in the
rectification order, the assessing officer has determined the
suppressed freight charges as Rs.13,17,651/- and computed tax on
that basis. It also appears that some additional factors were taken
into consideration in the rectification order. However, as in the case
of other assessment years, the principal basis for comparison appears
to be information taken from the Internet. It should also be noticed
that the assessing officer has not indicated the nature of information
derived from the Internet and whether such information related to
the freight charges levied by other transportation companies. In those
circumstances, the assessment order and rectification order relating
to assessment year 2014-15 also call for interference.
11. For reasons set out above, the impugned assessment orders
are quashed and these matters are remanded for re-consideration.
The assessing officer is directed to provide a reasonable opportunity
to the petitioner, including a personal hearing, and thereafter issue
fresh assessment orders within a maximum period of three months
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W.P.Nos.11916 of 2020 batch
from the date of receipt of a copy of this order. Consequently,
connected miscellaneous petitions are closed. No costs.
05.03.2024
Index : Yes / No
Internet : Yes / No
Neutral Citation : Yes / No
kal
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W.P.Nos.11916 of 2020 batch
To
The Assistant Commissioner (ST),
Tiruppur (Rural-I) Assessment Circle,
Tiruppur.
https://www.mhc.tn.gov.in/judis
W.P.Nos.11916 of 2020 batch
SENTHILKUMAR RAMAMOORTHY J.
kal
W.P.Nos.11916, 11921, 11923, 11924, 11926, 11930, 11933, 11934 of
2020 &
WMP Nos.14641,14642,14644,14645,14648,14651,14654 & 14657 of
05.03.2024
https://www.mhc.tn.gov.in/judis
