Madras High Court
The State Tax Officer vs Tvl.Pupa Lineraa on 12 March, 2025
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
1 W.A.(MD)NO.1445 OF 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 12.03.2025
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
AND
THE HON'BLE MR.JUSTICE M.JOTHIRAMAN
W.A.(MD)No.1445 of 2022
AND
C.M.P.(MD)No.11624 of 2022
The State Tax Officer,
Karur-3 Assessment Circle, Karur. ... Appellant /
Respondent
Vs.
Tvl.Pupa Lineraa,Rep. By its Partner,
S.Pushpa Rajan,113, Periakulathu Palayam West,
Vengamedu Inam,
Karur-639 006. ... Respondent / Writ petitioner
Prayer: Writ Appeal filed under Clause 15 of Letters Patent, to set
aside the order dated 27.10.2021 made in W.P.(MD)No.14494 of
2021 and allow the writ appeal.
For Appellant : Mr.R.Suresh Kumar,
Additional Government Pleader.
For Respondent : Mr.N.Prasad for Mr.N.Inbarajan
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1/10
2 W.A.(MD)NO.1445 OF 2022
JUDGMENT
(Order of the Court was delivered by G.R.SWAMINATHAN, J.)
Heard the learned Additional Government Pleader appearing
for the appellant and the learned counsel appearing for the
respondent / assessee.
2.The respondent herein is a registered dealer coming under
the jurisdiction of the appellant. They were engaged in the business
of buying and selling Ceramic tiles and processing the broken tiles
and selling them as border tiles. The case on hand pertains to the
assessment year 2012-13. The dealer had been filing their monthly
returns as per Section 21 of the Tamil Nadu Value Added Tax Act,
2006. Section 22(2) of the Act states that every such dealer shall be
deemed to have been assessed for the year on the 31st day of October
of the succeeding year. Since we are concerned with the assessment
year 2012-13, the dealer shall be deemed to have been assessed on
31.10.2013.
3.There was a raid by the Enforcement Wing on the dealer's
business premises on 28.04.2015, 29.04.2015, 11.06.2015 to
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14.06.2015. Certain irregularities were noted. Hence, notice under
Section 22(4) of the Act was issued on 20.08.2015. The assessee
offered their explanation. The proceedings dated 29.01.2016 issued
by the Commercial Tax Officer, Karur (East) generated only nil
demand.
4.The matter did not rest there. On 22.02.2021, the assessing
officer issued notice under Section 27 of the Act. The assessing
officer noted that the assessee had effected inter-state purchases of
Ceramic tiles to the tune of Rs.83,26,868/- during the year
2012-2013 ; but suppressed the same while filing the monthly
returns. The assessing officer is said to have come across the said
information on verification of Gujarat check post data. In response to
the notice, the assessee replied vide letter dated 25.03.2021 that they
had closed their firm on 01.06.2016 itself ; they had cancelled the
registration under TNVAT Act and also duly intimated the same to the
authority. Thereafter, the assessing officer passed the order dated
30.03.2021 under Section 27(1)(a) of the TNVAT Act, 2006
determining the assessee's additional tax liability at Rs.14,60,949/- ;
penalty to the tune of Rs.21,91,424/- was also levied. Challenging
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the said assessment order passed under Section 27 of the Act, the
assessee filed WP.(MD)No.14494 of 2021. The learned single Judge
vide order dated 27.10.2021 quashed the assessment order and
allowed the writ petition on the ground that it was time barred.
Challenging the said order, the department has filed this intra-court
appeal.
5.The learned Additional Government Pleader appearing for
the appellant pointed out that the proceedings cannot be said to be
time-barred.
6.Before the learned Single Judge, the department argued that
the expression “assessment” occurring in Section 27(1)(a) of the Act
for the purpose of computing limitation would mean either deemed
assessment under Section 22 (2) of the Act or re-assessment under
Section 22(4) of the Act depending on the context. The assessee had
been re-assessed on 30.09.2016. Hence, limitation for invoking
Section 27 of TNVAT Act, 2006 would start only from 30.09.2016.
Since notice was issued on 22.02.2021, it was within six years and
cannot be said to be time-barred. This contention was rejected by
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the learned Single Judge who held that re-assessment under Section
22(4) must be made before the deeming assessment is made on the
31st October of the succeeding year. Since it was not so done, the date
of deemed assessment alone shall be construed as assessment date
for the purpose of reckoning the limitation of six years for invoking
Section 27(1)(a) of the Act. This proposition no longer holds good in
view of the subsequent decision of the Hon'ble Division Bench vide
order dated 18.09.2024 in WP Nos.6153 of 2021 etc., (M/s.Oliva
Care vs. State Tax Officer, Podhanur Assessment Circle,
Coimbatore). It was held therein that there is no period of limitation
under Section 22(4) of TNVAT Act, 2006 for passing an order if any of
the three circumstances stipulated in the provision are attracted. It
was however clarified that this power must be exercised within a
reasonable period. The order of the learned Single Judge rests on the
proposition that re-assessment under Section 22(4) of the Act cannot
be after the date of deemed assessment. Since this proposition is no
longer tenable, the order of the learned Single Judge warrants
interference.
7.For passing an order under Section 27(1)(a) of the TNVAT
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Act, 2006, the proceedings should have been initiated within a period
of six years from the date of assessment. Since the learned Single
Judge took 31.10.2013 as the starting point for limitation, it was
concluded that proceedings under Section 27(1)(a) of the Act, 2006
should have been initiated prior to 29.10.2019. As the proceedings
were initiated only on 22.02.2021, the learned Single Judge held that
they were hit by limitation. For the reasons set out in the previous
paragraph, this conclusion cannot hold good. The starting point for
limitation cannot be 31.10.2013 but only 29.01.2016 as rightly
contended by the assessing officer.
8.Though we have agreed with the learned Additional
Government Pleader on the issue of limitation, we are still of the view
that the assessment order impugned in the writ petition was rightly
set aside. This is because, the notices preceding the assessment
order are delightfully vague. Vagueness is one of the recognized
grounds for judicial review. Section 27(1)(a) of the TNVAT Act, 2006
which provides for revision of assessment contemplates issuing show
cause notice, giving the dealer a reasonable opportunity and making
enquiry. In other words, there has to be due compliance with the
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principles of natural justice. The issue has civil consequences and
financial implications for the assessee. When any show cause notice
is issued, it must contain sufficient details and particulars. Only then
the noticee can adequately defend himself. He should know what he
is up against. A show cause notice is like a charge. Unless it is
precise, the person called upon to respond cannot defend himself.
That is why, vagueness is a ground for interference by the writ court
even at the notice stage. It would have been better if the writ
petitioner had pointed this out earlier and demanded better
particulars from the appellant. But the failure or omission on the
part of the assessee cannot be taken advantage by the assessing
officer. An order is like a superstructure. The show cause notice is
the foundation. If the foundation is weak, the superstructure will fall
at the slightest push.
9.We went through the notice dated 22.02.2021 issued by the
appellant. The opening paragraph reads as follows :
“Please take notice that from the verification of Gujarat Check post
data, you have effected interstate purchase of Ceramic tiles to the
tune of Rs.83,26,858/- during the year 2012-2013.But you have
reported the interstate purchases in your Annexure-l and IA of the
monthly returns for the month of June 2012 to March 2013 is NIL. It
proves that you had suppressed the interstate purchases of ceramic
tiles for the turnover of Rs.83,26,868/- for the year 2012-2013.”
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The noticee can only deny such an allegation. The assessee ought to
have been confronted with specific transactional details. One is not
able to discern as to how many purchases were made by the assessee
and from whom and on what dates. Nothing has been spelt out. The
assessee has not been given reasonable opportunity to defend
themselves. That apart, the expression employed in the notice is
“proved”. This indicates utter pre-determination on the part of the
assessing officer. The assessing officer after providing all the details
should form only tentative conclusions which are liable to be
displaced if the assessee shows good cause. If in the show cause
notice itself, final decision has been arrived at, then the subsequent
enquiry can only be termed as a farcical exercise. That is why, in the
decision reported in (2017) 99 VST 343 (Mad) JKM Graphics
Solutions Private Limited V. CTO, Vepery Assessment Circle,
Chennai), it was held that notice issued under Section 27(1)(a) of
the Act should disclose full particulars, since the noticee is expected
to know as to whether what is the case levelled against him which he
has to respond. If the details furnished are inadequate, the show
cause notice cannot be said to be in consonance with the statutory
scheme.
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10.For the foregoing reasons, while confirming the order of the
learned Single Judge setting aside the order impugned in the writ
petition, we grant liberty to the appellant to proceed afresh as per
law. If the appellant initiates action within two months, the assessee
cannot raise the plea of limitation. The order of the learned Single
Judge is modified. This writ appeal is partly allowed. No costs.
Consequently, connected miscellaneous petition is closed.
(G.R.SWAMINATHAN, J.) & (M.JOTHIRAMAN, J.)
12th March 2025
NCC : Yes / No
Index : Yes / No
Internet : Yes/ No
PMU
To
The State Tax Officer,
Karur-3 Assessment Circle, Karur.
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G.R.SWAMINATHAN, J.
AND
M.JOTHIRAMAN, J.
PMU
12.03.2025
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