The prayer in the Writ Petition is to quash the order passed by the Special Committee constituted under the provisions of Section 16(d) of the Tamil Nadu General Sales Tax Act, 1959, dated 20.02.2009.
2. The case of the petitioner is that he is a dealer in cement and an assessee on the file of the second respondent. For the year 2002-2003, he reported a total and taxable turnover of Rs.62,26,011/-. Based on the inspection made on 06.03.2003, the first respondent passed a best of judgment order under Section 12(2) of the Act by determining the total and taxable turnover of Rs.1,14,50,559.
3. The petitioner submits that the assessing authority has not deducted the discount of Rs.3,66,614/- given by the cement companies which are clearly recorded at page 255 of the ledger. Further, he alleges that instead of assessing only at 1% as per the notification issued by the Commissioner of Commercial Taxes (CT), Chennai, in Lr.No.K.Dis Act Cell 1/17623/04, dated 08.04.2004, the Assessing officer has wrongly assessed the sale turnover as per Section 3 (2-A) of the Act and passed the best of judgment order, which is not legal. The petitioner would further submit that they filed an application under Section 16(d) of the TNGST Act against the order of assessment, dated 14.06.2007, by contending that there was a violation of principles of natural justice and that during inspection there was no stock variation as alleged and if stock was taken then and there, there will be no variation.
4. In the petition filed by the before the Committee under Section 16(d), the petitioner raised the following contentions:- "The assessing authority for sustaining the estimation has stated that during inspection the appellants have admitted the alleged stock variation. In this aspect, the appellants submit that the inspecting authority had prepared statement and compelled them to sign in the same. The explanations putforth before them was not considered judicially. Even otherwise, the High Court in TC 8/78, dated 21.07.1996. (Tvl.Lilly Oil Mills) has clearly held that "merely because the assessee did not put forward a particular defence at the stage of inspection, it cannot be said that it will be deprived of a right to defend itself at the stage of the assessment or at the appellate stage". The same view was also upheld in the latest decision reported in 111 STC 143 (Tvl.London Stores) and GVST 478 (Amutha Metals).
The Assessing Officer has levied a penalty under
Section 12(3)(b) is unlawful. The penalty could be levied if only concealment of turnover with intent to evade tax is proved. The appellants have a valid and proper explanation for alleged discrepancies and it has not been proved there has been suppressions of sales with intention to evade tax. The levy of penalty is not warranted."
5. The learned counsel for the petitioner would submit that the Committee did not take into consideration the relevant factual details which had been raised to show that the provisions of the Act and Rules are not attracted and that itself would amount to violations of principles of natural justice.
6. The learned counsel for the petitioner in support of his contention placed reliance upon an order passed by this Court in W.P.Nos.34709 to 34712 of 2007, wherein this Court disposed of the said Writ Petition and remanded the matter to the respondents for fresh consideration on merits and in accordance with law. Apart from that, he also relied upon a clarification issued by the Commissioner of commercial taxes, dated 08.04.2004. Further, he would vehemently submit that the penalty could be levied if only concealment of turnover with intent to evade tax is proved and such is not the case of the petitioner. Therefore, he would submit that the impugned order is violation of principles of natural justice.
7. Per contra, The learned Special Government Pleader appearing for the respondents would contend that the impugned orders do not call for interference, more particularly, considering the scope of Section 16(D) of the Act. He would submit that power under the said Section cannot be constituted to substitute the appellate power under the statute and the circumstances warranting invoking of such power is very limited and the committee had found that there has been no violation of principles of natural justice and rightly, rejected the petitioner's case. In such circumstances, the order cannot be assailed by way of these present Writ Petitions. Added that, he points out that D-7 records have been unearthed from the assessee premises by the Enforcement Wing Officers.
8. In reply, the learned counsel for the petitioner would submit that the Assessing Officer has stated that the entire D-7 records which have been seized, have already been accounted for.
I have carefully considered the submissions made by either parties and perused the materials available on record.
9. Before going into the factual matrix of the matter, it is relevant to extract Section 16(D)(2) of the Act for the purpose of deciding this case.
"16.D.1.......
(2) Notwithstanding anything contained in this Act, the Special Committee may, of its own motion or on application, call for and examine the records of the assessing authority in respect of any proceeding or order under sub-section (2) or (3) of
Section 12 or sub-section (1) or (2) of Section 16, if such proceeding or order is passed in violation of the provisions of the Act or rules made thereunder or without following the principles of natural justice, set aside the said proceeding or order and direct the assessing authority to make a fresh assessment and pass fresh proceeding or order in such manner as may be directed. Provided that such proceeding or order against which any appeal or writ is pending shall not be entertained under this sub-section."
10. In terms of the said power, the Committee may on its own motion or its application examine the records of the Assessing Officer in respect of any order under
Section 12 (2) or (3) or
Section 16(1) or (2), if such proceedings or order is passed.
(a) In violation of the provisions of the Act and the Rules made thereunder.
(b) made without following the principles of natural justice. and if it is found that on violation of the two conditions as mentioned above, the Committee has powers to direct the Assessing Authority to make fresh assessment and pass fresh proceeding or order in such manner as may be directed.
11. Therefore, the Committee while considering the petition under Section 16(D) of the Act has to examine as to whether there is a violation of the provisions of the Act or Rules and that the order of the assessment authority has been passed without following the principles of natural justice.
12. As could be seen in the impugned orders, the Committee had rendered a finding, that on perusal of the files, it revealed that sufficient opportunity had been given to dealer to file objection and there is no violation of principles of natural justice and Act and Rules.
13. In my opinion, such a finding without reasons itself would be in violation of the principles of natural justice. In the case of Muhurjee's case reported in S.N. Mukherjee v. Union of India, (1990) 4 SCC 594, the Hon'ble Supreme Court held in paragraph Nos:35,38 and 39, are as follows:- "35. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision, are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.
.....
38. The object underlying the rules of natural justice "is to prevent miscarriage of justice" and secure "fair play in action". As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi-judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Decisions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case.
40. For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision."
14. Therefore, the necessity to record reasons has been well settled by the various decisions of the Hon'ble Supreme Court as well as in the decisions cited above.
15. In that view of the matter, I deem it appropriate to set aside the impugned order and remand the matter for fresh consideration to the first respondent, who shall take into consideration the facts and question of law raised by the petitioner in the petition and pass appropriate orders on merits and in accordance with law at the earliest. Accordingly, this Writ Petition stands disposed of. Consequently, connected M.P. is closed. No costs.
ssm To
1.The Special Committee, O/o, Commissioner of Commercial Taxes, Ezlilagam, Chepauk, Chennai.
2.The Commercial Tax Officer, West Veli Street Circle, Madurai.