M/s. Anjanaya Enterprises, No.28 Gopalakrishna Road, T. Nagar, Chennai.17. ...Petitioner Vs.
The Commercial Tax Officer, T.Nagar (North) Assessment Circle, No.46, Greenways Road, Chennai.28. ... Respondent Prayer: Petitions filed under
Article 226 of the Constitution of India to issue a Writ of Certiorarified Mandamus calling for the records of the respondent in TNGST/1521561/1998-99, 1999-2000, and 2000-2001, set aside the impugned proceedings dated 26.8.2003, and 10.10.2003 and further direct the respondent to furnish the details collected from the third parties, thereafter give a reasonable opportunity to the petitioner to put forth the objections as prayed for in the objections and thereafter pass orders in accordance with the provisions of the Tamil Nadu General Sales Tax Act 1959.
" to call for the records of the respondent in TNGST/1521561/1999-2000, set aside the impugned proceedings dated 10.10.2003 and further direct the respondent to furnish the details collected from the third parties, thereafter give a reasonable opportunity to the petitioner to put forth the objections as prayed for in the objections and thereafter pass orders in accordance with the provisions of the Tamil Nadu General Sales Tax Act 1959.
2. The prayer in the WP No. 36389 of 2005, which relates to O.A.No. 1342 of 2003, reads as follows:-
" to call for the records of the respondent in TNGST/1521561/2000-2001, set aside the impugned proceedings dated 26.8.2003 and further direct the respondent to furnish the details collected from the third parties, thereafter give a reasonable opportunity to the petitioner to put forth the objections as prayed for in the objections and thereafter pass orders in accordance with the provisions of the Tamil Nadu General Sales Tax Act 1959.
3. The prayer in the WP No. 36598 of 2005, which relates to O.P.No. 1341 of 2003, reads as follows:-
" to call for the records of the respondent in TNGST/1521561/1998-1999, set aside the impugned proceedings dated 26.8.2003 and further direct the respondent to furnish the details collected from the third parties, thereafter give a reasonable opportunity to the petitioner to put forth the objections as prayed for in the objections and thereafter pass orders in accordance with the provisions of the Tamil Nadu General Sales Tax Act 1959.
4. The petitioner states that he is the registered dealer and an assessee under the Commercial Taxes Department in the State of Kerala and also in terms of the Central Sales Tax Act 1956. The petitioner applied for the registration in the State of Tamilnadu in the year 1999 and was registered on 31.3.1999. According to the petitioner, the registration in Tamilnadu was cancelled on 2.12.1999. The petitioner states that he wound up the business in Tamilnadu in February 2000. He further states that in the course of business, he made local sales as well as inter State sales. The goods were thereafter sold to the buyers at Tamilnadu. According to the petitioner, he has paid the sales tax in the State of Kerala as applicable. But the respondent/ Commercial Taxes Department at Chennai, issued notices demanding sales tax treating the sale transactions to the buyers at Tamilnadu as local sales and also stated that the purchase and sales were effected within the State of Tamilnadu and therefore, the petitioner is liable under the T.N.G.S.T.Act. Such notices were issued for three assessment years, which are challenged in the three writ petitions as above.
5. Immediately on receipt of the said notices, the petitioner filed three objections dated 21.7.2003 for the assessment years 1998-99, 1999-2000 and 2001-2001. The relevant portion of the objection to the pre-assessment notice has been extracted in the impugned assessment orders and reads as follows:-
" In February 2000, M/s. Sree Sakthi Mills terminated the dealership assigned to M/s. Sree Sakthi Mills terminated the dealership assigned to M/s. Anjaneya Enterprises. Subsequent to this period, no sale is effected by M/s. Anjaneya Enterprises, Chennai as stated in your above referred notice.
The materials relied on to arrive at a conclusion that M/s. Anjaneya Enterprises effected 1st sale within the State of Tamil Nadu may be disclosed prior to finalization of the order of assessment. The addition made to the assumed turnover is also arbitrary, illegal and unwarranted.
I also request you to provide an opportunity of being heard prior to finalization of the order of assessment enabling me to adduce evidences in support of this objection."
6. Having acknowledged the letter dated 21.7.2003, the respondent/Commercial Tax Officer, passed the separate final assessment orders viz. (i) Assessment order dated 26.8.2003 for the assessment year 1998-99; (ii) Assessment order dated 10.10.2003 for the assessment year 1999-2000; and (iii) Assessment order dated 26.8.2003 for the assessment year 2000-2001. In all the three assessment orders, the respondent/ Commercial Tax Officer refers to the letter dated 21.7.2003 stating that it was received on 25.7.2003. The Assessing Officer, in its order, held that the dealer has stated that they will send some details within 10 days but did not file any detail. Insofar as the assessment order for the year 1998-99, the Commercial Tax Officer further states that the dealer has done business during the year 1998-99 but failed to disclose the turnover in the monthly returns and pay tax there on and hence, the proposals were confirmed. Insofar as the assessment order for the year 1999-2000 is concerned, it is stated that after receiving notice, the dealer has neither filed any reply nor requested for further time and hence, the proposal was confirmed. Insofar as the assessment year 2000-2001 is concerned, it is stated that the dealer has failed to disclose the turnover in the monthly returns and pay tax due thereon and hence no further time could be allowed. Strangely, it is stated that further enquiry is warranted, but the proposal was however confirmed.
7. On the face of the record, the reasons stated by the Commercial Tax Officer clearly reveal that there is total non application of mind. In the common letter dated 21.7.2003, applicable to all the three assessments, the petitioner has clearly made a request to furnish materials relied upon to arrive at a conclusion that the assessee had effected sales within the State of Tamil Nadu. There is a specific request for personal hearing prior to passing of the final order. This was not granted to the petitioner. This assumes significance as the notice is issued to the dealer on 26.6.2003 in respect of the sale relatable to the years 1998-99, 1999-2000 and 2000-2001. The respondents, who have taken action belatedly after a considerable period of time, should give reasonable time and opportunity to the party to defend themselves.
8. The three writ petitions have been filed on the ground that Principles of Natural Justice has been violated and the assessment orders have been passed without furnishing the materials based on which the assessment has been made. Denial of reasonable opportunity vitiates the order. He has further submitted that when a specific request has been made for personal hearing, the authority is bound to give an opportunity, which has not been done in the present cases.
9. Mr. J. Ganesh, learned Government Advocate (Taxes) submitted that the assessee had closed down the business in the year 2000 itself and their whereabouts are not known. With great difficulty, the department was able to trace the petitioner at Kerala and based on the final assessment order, the revenue recovery proceedings were initiated in the year 2006. Further, the petitioner has to pursue the remedy by way of appeal and ought not to have approached this Court invoking the extraordinary jurisdiction under
Article 226 of the Constitution of India. Further more, the order has been passed on merits and should be adjudicated before the proper forum.
10. No doubt, the order of assessment is passed on merits and it can be appealed under the statute. However, in the facts of the present case, there are good reason for this Court to lean in favour of the petitioner, and to grant relief by invoking
Article 226 of the Constitution of India and the reasons are as follows:-
11. The assessment order in this case relates to the years 1998-99, 1999-2000 and 2000-2001. The orders impugned were passed on 26.8.2003 in two cases and on 10.10.2003 in one case. Immediately, thereafter, the petitioner filed original petitions challenging the assessment orders on the ground that there is a violation of Principles of Natural Justice viz., no opportunity of hearing was given to the petitioner and the materials based on which, the orders of assessment has been passed have not been furnished inspite of a specific request.
12. The respondents were put on notice before the Tribunal in the Original petitions filed by the petitioner in the year 2003. Therefore, the stand of the respondent that the petitioner was evading the department is a fallacy. In fact, after abolition of the Tribunal, the original petitions have been transferred to this Court and renumbered as writ petitions and the petitioner has been pursuing the case diligently.
13. On merits, it is on record that the petitioner has made a specific request that an opportunity of hearing should be given before finalisation of the assessment so as to enable the petitioner to produce evidence in support of his objections to the departments stand. Further a specific objection has been made stating that Sri Sakthi Mills had terminated the dealership assigned to the assessee viz., M/s.Anjaneya Enterprises in February 2000 itself and no sale was effected by the assessee for the period stated in the notice. A specific dispute was raised by the petitioner and to counter the stand taken by the respondent/department, the materials relied upon by the Department was sought for in the letter dated 21.7.2003. Without replying to the said letter, the department has passed the final assessment orders stating that no personal hearing was sought for. The order states that the assessee did not ask for time and no details were furnished by the assessee. This statement is an error on the face of record. It has been specifically stated in one order that the records were perused and the department is not inclined to grant further time. The petitioner should have been given an opportunity to put forward his plea at the time of finalisation of the assessment in view of the specific request. Before passing the final order, when a specific request is made by the assessee, it is the duty of the department to furnish the material that are relied upon for the purpose of concluding the assessment against the assessee. The Courts have repeatedly held that any material collected at the time of investigation done behind the back of the assessee, should be furnished to the assessee at the time of finalisation of the assessment. This will be keeping in line with the principles of Natural Justice and fair play. It will also avoid allegation of arbitrariness.
14. In its order dated 18.12.1997 in WP Nos. 17222 to 17224, this Court while deciding a similar case, directed the authorities to furnish the material gathered by the Enforcement Wing to the assessee, which was relied upon by the assessing authority. The same view was followed in the order dated 30.12.1997 in WP No. 19596 of 2007.
15. The Apex Court in the decision reported in Mahadayal Premchandra Vs. - Commecial Tax Officer, Calcutta and another ( 9 STC 428) emphasized the need for giving an opportunity to the assessee to meet the points urged by the Department. In effect, the Apex Court clearly indicated that there should be no violation of Principles of Natural Justice in the matter of assessment.
16. In the present cases, as could be seen from the assessment orders passed in three cases, inspite of specific request, the materials relied upon by the department has not been furnished and the personal hearing sought for has not been granted. But the assessment orders have been passed holding that no such request was made by the assessee. It also held that the assessee did not furnishing the materials inspite of granting time. This statement is incorrect and contrary to record. It is clear that there is non application of mind by the authority while passing the assessment orders. In such view of the matters, the assessment orders are liable to be set aside on the ground of violation of Principles of Natural Justice for the reasons stated above.
17. The impugned assessment orders in these writ petitions are set aside and the matters are remitted back to the competent authority for re-hearing of the matters after affording sufficient opportunity to the petitioner/assessee, authorised representative or the counsel for the petitioner. All the materials relied upon by the department should be furnished to the petitioner.
18. The petitioner/assessee undertakes to appear before the authority within a period of one week from the date of receipt of a copy of this order and the authority shall furnish all the materials relied upon to the assessee on proper acknowledgement. The petitioner/assessee is also entitled to furnish his reply/objection to the notice and on the receipt of such objections, the authority shall conclude the proceedings within a period of one month thereafter.
19. On instructions, the learned counsel for the petitioner states that the property which is the subject matter of the attachment proceedings by the respondent/department consequent to the assessment orders will not be sold or alienated or otherwise dealt with or without the prior permission of the respondent/authority until the finalisation of the assessment proceedings taken place as directed by this Court.
20. The writ petitions are allowed as above. Consequently, connected miscellaneous petitions are closed. No costs.
ra To The Commercial Tax Officer, T.Nagar (North) Assessment Circle, No.46, Greenways Road, Chennai 28