in all W.Ps.
Petitions filed Under
Article 226 of the Constitution of India to issue a Writ of Certiorari, to call for the records relating to the Assessment Order TIN/33100840008/2014-15, 2012-13, 2013-14 & 2011-12, respectively, dated 13.04.2016 passed by the respondent, quash the same as arbitrary and illegal.
The petitioner, who is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short TNVAT Act), has filed these writ petitions challenging the assessment orders for the assessment years 2014-15, 2012-13, 2013-14 and 2011-12, respectively. The petitioners place of business was inspected by the Enforcement Wing on 26.11.2015, and certain defects were noticed viz.,
(i) the turnover for the previous year has exceeded Rs.200 Crores and therefore, for the months the dealer has to pay interest for the belated payment of tax;
(ii) on verification of other end dealers Annexure II, it was found that such dealers have not filed returns and the petitioner has claimed input tax; and
(iii) the petitioner has made sales to SEZ unit located at other state and therefore, input tax credit has to be reversed.
2.Based on such findings, the respondent-assessing officer issued notice dated 12.01.2016, proposing to reverse the input tax credit availed by the petitioner. The petitioner submitted their objections dated 25.01.2016, it was contended that the turnover of the petitioner under the TNVAT Act, did not exceed Rs.200 Crores in the previous year and the question of levying interest does not arise.
3.In this regard, it was also pointed out that they have also submitted a representation to the Joint Commissioner of Commercial Taxes, vide letter dated 29.01.2014, for the assessment years 2011-11 to 2013-14. The Joint Commissioner of Commercial Taxes, by letter dated 20.12.2010, decided to transfer the monthly returns filed by the petitioner to Large Tax Payers Unit, for the assessment year 2010-11 to enable the petitioner to file their monthly returns from the month of December 2010 to be filed on or before 12.01.2011. By a subsequent communication dated 30.12.2010, the Joint Commissioner, informed that the petitioners turnover under the TNVAT Act, is below Rs.200 Crores and therefore, they shall file their monthly returns in their respective assessment circle, where they are having registration. Therefore, the petitioner submitted that the question of demanding interest does not arise.
4.With regard to proposal to reverse input tax credit, stating that the selling dealers did not file returns and directing the petitioner to reverse the input tax credit, it was submitted that they have taken credit based on the original invoice issued by such registered dealers, whose status is active and they have also produced the original bills against such credit to the satisfaction of the Audit Unit and such dealers are also active and requested the respondent to take up the matter with the selling dealers.
5.The petitioner relied upon the decisions of this Court in Althaf Shoes (P) Limited vs. ACCT, Valluvarkottam Asst. Circle, Chennai reported in 50 VST 179 and in Sri Vinayaga Agencies vs. ACCT, Vadapalani-I Asst. Circle, Chennai and another reported in 60 VST 283.
6.Subsequently, the petitioner submitted another reply dated 11.03.2016, which appears to be a more elaborate rely. In the said reply, the petitioner relied on the definition of 'taxable turnover' as defined under Section 2 (38) of the TNVAT Act, and submitted that it shall be determined after making such deductions as prescribed under the said Act from the total turnover. The petitioner referred to
Section 2(j) of the Central Sales Tax Act, 1956 (in short CST Act) and submitted that such turnover shall not form part of total and taxable turnover under the TNVAT Act. Thus, it was contended that the expression taxable turnover used in proviso to Rule 7 (1) refers to only taxable turnover under the TNVAT Act, and does not include the turnover liable to tax under the CST Act. In the objections, the petitioner specifically sought for an opportunity of personal hearing before passing orders. Though such a specific request having been made in the objections dated 11.03.2016, which has been referred to by the respondent, no opportunity of personal hearing was granted. This is the first ground, on which the petitioner would contend that the impugned order is liable to be set aside.
7.With regard to legal aspects, the learned counsel for the petitioner submitted that the concept of total and taxable turnover is alien to the CST Act and therefore, the question of referring to the same for computing turnover by the petitioner stating that it is over and above Rs.200 Crores is erroneous.
8.Learned counsel placed much emphasis on the letter written by the Joint Commissioner, dated 30.12.2010, which is an intimation to the petitioner stating that on verification of the returns for the year 2009-10, the taxable turnover under the TNVAT Act is below Rs.200 Crores and having not reached Rs.200 Crores, they have to file their returns in their respective assessment circle.
9.Learned Additional Government Pleader, by referring to the counter affidavit filed by the respondent submitted that the taxable turnover exceeded Rs.200 Crores in the previous year and in such case the dealer is liable to file his monthly returns along with proof of payment of tax on or before 14th of the succeeding month as per Rule 7(8) of the VAT Rules and read with Rule 5(1) of the CST Rules. Since the petitioner is in the regular habit of filing monthly returns belatedly, imposition of penal interest under Section 42(3) of the TNVAT Act is proper.
10.With regard to mismatch issued also, the respondent has justified the findings recorded in the impugned assessment order. After referring to
Section 9 of the CST Act and Rule 11(1) of the CST Act, it is submitted that the assessment, which has been done on the petitioner is in accordance with the provisions of the Act and Rules and if the petitioner is aggrieved, he should avail the statutory appellate remedy.
11.Heard Mr.Joseph Prabakar, learned counsel for the petitioner and Mr.K.Venkatesh, learned Government Advocate for the respondent.
12.As noticed above, the respondent did not afford an opportunity of personal hearing to the petitioner in spite of specific request made in this regard. This would be sufficient to set aside the impugned assessment order on the ground that it violates principles of natural justice.
13.The core issue, which requires to be decided is, how to compute the taxable turnover. Section 2(38) of the TNVAT Act defines 'taxable turnover' to mean the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed. 'Total turnover' has been defined under Section 2(40) of the TNVAT Act, to mean the aggregate turnover in all goods of a dealer at all places of business in the state, whether or not, the whole or any portion of such turnover is liable to tax. 'Turnover' has been defined under Section 2(41) of the TNVAT Act, which means the aggregate amount for which goods are all bought or sold or delivered by a dealer either directly or through another.
14.To determine the 'turnover' under the CST Act, we have to refer to the Central Sales Tax Act (Registration and Turnover) Rules 1957 (in short CST (Registration and Turnover) Rules). Under Rule 11(1) of the said Rules, the period of turnover in relation to any dealer liable to pay tax under the CST Act shall be the same, as the period in respect of which he is liable to submit returns under the General Sales Tax law of the appropriate State. Proviso states that in relation to a dealer, who is not liable to submit returns under the General Sales Tax law of the appropriate State (TNVAT), the period of turnover shall be a quarter ending on the 30th June, 30th September, 31st December and 31st March.
15.Save as otherwise expressly provided for in the said Rules or in the CST (Registration and Turnover) Rules, the provisions of the TNGST Act and Rules made thereunder or the TNVAT Act and the Rules made thereunder, as the case may be, shall apply mutatis mutandis for the purpose of submission of returns of turnover by a dealer registered under Section 7 of the Act, showing his transaction in the course of interstate trade or commerce or in the course of export of goods out of the territory of India etc.
16.Thus, it is the endeavour of the petitioner to state that the respondent committed a serious error in clubbing turnover under the CST Act and to draw the inference that the taxable turnover has exceeded Rs.200 Crores and therefore, returns filed by them are belated and the petitioner is liable for payment of interest.
17.I find that these contentions were not specifically put forth by the petitioner as projected before this Court in these writ petitions. One more aspect that has to be noted is with regard to Rule 7 of the TNVAT Rules, 2007, which states that every dealer shall file their return for each month in Form I on or before 20th of the succeeding month. Sub-Rule 8 of Rule 7, is sought to be invoked by the respondent by stating that if the taxable turnover in the previous year is Rs.200 Crores and above, the returns should be filed on or before 14th of the succeeding month. This having not been done, the petitioner is liable for payment of interest.
18.Had the respondent afforded an opportunity of personal hearing, the probabilities are, this litigation itself could have been avoided. The impact of the intimation sent by the Joint Commissioner (CT), LTU dated 30.12.2010, stating that the petitioners taxable turnover has not exceeded Rs.200 Crores and has to file returns before his assessing officer has not been analysed by the respondent. Whether at all the turnover under the CST Act could be clubbed with the turnover of the TNVAT Act, is an important question to be decided. However, the respondent having not considered these issues, this Court is of the view that the matter requires to be remanded to the assessing officer for fresh consideration, on the above factual and legal issues, after affording an opportunity of personal hearing.
19.For all the above reasons, these writ petitions are allowed, the impugned orders are set aside and the matters are remanded to the respondent for fresh consideration. The respondent shall afford an opportunity of personal hearing to the petitioner, consider the factual and legal issues raised by the petitioner and re-do the assessment in accordance with law. No costs. Consequently, connected miscellaneous petitions are closed.
06.11.2017 Index : Yes/No abr To The Assistant Commissioner (CT), Nandambakkam Assessment Circle, No.17, Loganathan Nagar, 2nd Street, Choolaimedu, Chennai-600 094.
T.S.SIVAGNANAM, J.
abr Pre-delivery orders made in W.P.Nos.20633 of 2016 & 22765 to 22767 of 2016 06.11.2017 W.P.Nos.20633 of 2016 & 22765 to 22767 of 2016 To The Hon'ble Mr.Justice T.S.SIVAGNANAM From A.BHAVATHARANI, PA to the Hon'ble Judges.