(Prayer: Petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorari, calling for the records in SCP.No.29/08 (CCT/M3/66705/06), dated 21.05.2008 on the file of the 2nd respondent and quash the same as illegal, arbitrary and against law.)
The petitioner has sought for a Writ of Certiorari, to quash the order of the Special Committee (Commercial Taxes), Chennai, the second respondent herein dated 21.05.2008 by which the second respondent has rejected the claim made by the petitioner.
2. Facts of the case are as follows:
According to the petitioner, the petitioner is a manufacture of M.S.Hex Bolts and an assessee on the file of the 1st respondent in TNGST No.4881024. On 23.03.2005, the Enforcement Wing inspected the petitioner's industry and certain stock differences were recorded. Thereafter, the petitioner made a petition to rectify the difference before the Enforcement Wing, the Deputy Commercial Tax Officer-II, (Central Enforcement Wing), Madurai on 19.04.2005 stating that the stock was not taken properly as per the books of accounts. However, the same was not considered by the first respondent. Thereafter a pre-assessment notice was issued on 10.04.2006 to the petitioner, against which the petitioner filed a detailed objection on 05.07.2006 stating that they are maintaining correct accounts and there was no stock diffence. However, the Deputy Commercial Tax Officer, Tallakulam Circle, Madurai, the first respondent herein passed an order dated 25.09.2006 stating that since the dealers have not filed any objections to the pre-assessment notice dated 10.04.2006, the contentions raised by the dealers as objections are taken as objection against the proposals and accordingly, confirmed the proposal. Being aggrieved by the same, the petitioner preferred an application under Section 16-D of the Tamil Nadu General Sales Tax Act, before the Special Committee (Commercial Taxes), Chennai - 5, the second respondent herein and that the same was rejected on 21.05.2008 stating that there is no violation of the principles of natural justice. The said order is under challenge in this writ petition.
3. Assailing the correctness of the impugned order, learned counsel for the petitioner submitted that the order passed by the first respondent stating that no reply was filed by the petitioner to pre-assessment notice dated 10.04.2006 is factually incorrect. He further submitted that the petitioner industry is maintaining correct records and there was no stock variation in bolts, wire & rods and scraps, as alleged by the first respondent, at the time of inspection by the Enforcement Wing. He further submitted that the first respondent has levied penalty under Section 12(3)(b) of the TNGST Act, which is arbitrary and unlawful in nature. According to the learned counsel for the petitioner, while passing an order under Section 16-D of the TNGST Act, without considering the real facts, the second respondent has simply rejected the application stating that the petitioner has not filed any reply to the pre-assessment, and hence, there is no violation of principles of natural justice. For the above said reasons, learned counsel for the petitioner has prayed to set aside the same.
4. On the basis of the counter affidavit filed by the Deputy Commercial Tax Officer, Tallakulam Circle, Madurai, Mr.Pala.Ramasamy, learned Special Government Pleader submitted that the petitioner is an assessee on the file of the first respondent. According to the first respondent, the petitioner was assessed on a total and taxable turnover of Rs.10,42,899/- against the turn over of Rs.9,30,846/- as per the proceedings of the first respondent dated 25.09.2006 in TNGST No.4881024/2004-2005. He further submitted that the petitioner did not prefer any statutory appeal against the said order as provided under Section 31 of the TNGST Act, 1959. He further submitted that after expiry of the period of limitation for filing the statutory appeal, the petitioner has filed an application before the second respondent under Section 16-D of the TNGST Act which has been dismissed as per order dated 21.05.2008. He further submitted that the first respondent has issued a pre-assessment notice on 14.04.2006, which was served on the petitioner on 09.05.2006 and the petitioner sought for one month time. Time was also granted to file their objections. However, no reply was received, and therefore, final order has been passed by the first respondent and when the order was sent for personal service, the petitioner has refused to receive it, hence, the order was served by affixture and on 11.10.2006, copy of the order was also sent by a registered post. According to him, the Enforcement Wing of the Commercial Tax Department had inspected the petitioner's business on 23.05.2005. During the course of inspection, they have found that the day book has not been maintained from 01.04.2004 to 23.03.2005 which was also admitted by the petitioner. He further submitted that as per Section 40 of the TNGST Act and Rule 29 of the TNGST Rules, the petitioner has to keep and maintain upto date, true and correct account showing full and complete particulars of his business and such other records as may be prescribed. According to the learned Special Government Pleader, the inspecting officers had taken the actual stock available at the time of inspection, only with the assistance of the petitioner and that the petitioner has also admitted the stock variation before them. He further submitted that being a manufacturer, the deficit stock in raw materials as well as finished goods represent only sales suppression of finished goods which is taxable. Hence, it cannot be left out. Regarding the assessment made on the sale of machinery, the learned Special Government Pleader has submitted that the petitioner has not produced the purchase invoices. He further submitted that in the absence of purchase bills and proof for sufference of tax at the earlier stage, the sales in the hands of the petitioner is taxable as first sales. Hence, the levy made on the sale of machinery is also correct. He further submitted that the second respondent has rejected the application filed by the petitioner under Section 16-D of the TNGST Act, 1959 and the second respondent is empowered to set aside the proceedings only in the case if such proceedings or order is passed in violation of the provisions of the Act or the Rules made thereunder or without following the principles of natural justice. According to the second respondent, the second respondent has not found any violation of the principle of natural justice, since the pre-assessment notice was served on 09.05.2006 and that the petitioner sought for one month time on 22.05.2006 which was also granted and therefore, there is no violation of principles of natural justice and therefore, the petition under Section 16-D of the Act has been rejected. For the above said reasons, he prayed that there is no manifest illegality in the impugned order warranting interference.
5. Heard the learned counsel appearing for the parties and perused the entire materials available on record.
6. Section 16-D of the Tamil Nadu General Sales Tax Act, 1959 speaks about the constitution of Special Committee and its powers. As per sub Section 2 of Section 16-D of the Act, 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 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 proceedings or order and direct the assessing authority to make a fresh assessment and pass fresh proceedings or order in such manner as may be directed. In the application filed under Section 16- D before the Special Committee, the petitioner has inter alia contended that upon receipt of pre assessment notice dated 10.04.2006, the assessee has filed a reply on 05.07.2006 and that the same has been acknowledged by the first respondent herein. It is also contended that they have maintained a day book and all the discrepancies pointed out by the Inspection wing were brought to the account, subsequently and that they were very much available in the books of accounts. It is the further contention that once the amounts were brought on record, there is no suppression of sales in purchase and they have assailed the factual finding recorded by the Assessing Officer on the ground that their reply to the pre assessment notice was not considered. When the petitioner had elaborately stated that things have been rectified and recorded in the books of accounts and also alleged violation of natural justice in not considering their reply and acknowledged by the Assessing Officer, the Special Committee in its order has recorded as follows:
"There is no reply filed by the dealer to the pre-assessment notice.
The assessment is made based on the D-3 proposals of the Deputy Commercial Tax Officer II, Central Enforcement Wing, Madurai.
The pre-assessment notice was served on 09.05.2006 and the dealers sought one month time on 22.05.2006 which was granted. No reply has been filed even after the lapse of one month's time i.e 28.06.2006. Therefore, the Assessing Officer passed orders on 25.09.2006 and sent by RPAD on 11.10.2006. Therefore, there is no violation of principles of natural justice. Hence, the petition is rejected".
7. As stated supra, the Special Committee while considering the records of the Assessing Officer, 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, ought to have examined as to whether the proceeding or order is passed in violation of the provisions of the Act or Rules made thereunder or without following principles of natural justice. Scrutiny of the order made by the Special Committee does not indicate as to whether the committee has examined, the aspect as to whether, there was any violation of the provisions of the Act and the committee has not even recording any finding to the above aspect.
8. Yet another aspect to be considered is that though the assessee has contended that they have submitted a reply to the notice, acknowledged on 05.07.2006, there is nothing on record to indicate as to whether the Special Committee has adverted to the above sa
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id aspect excepting to state that there is no violation of principles of natural justice. The powers conferred on the Special Committee is of wide amplitude and intended to be exercised, even when the assessees have failed to appeal against the order of assessment and even if an order of assessment has become final on account of limitation, an application under Section 16-D is maintainable to examine as to whether there is any violation of the provisions of the Act and the rules made thereafter or whether the order of assessment under sub Section 2 and 3 of Section 12 or sub Section 1 and 2 of Section 16 has been made without following the provisions. 9. In view of the above, this Court is of the considered view that the Special Committee has not exercised the powers as contemplated under the Act and therefore, the impugned order is set aside with a direction to the Committee to reexamine the application submitted under Section 16-D of the Act afresh and pass a detailed order within a period of four weeks from the date of receipt of a copy of this order. Accordingly, the writ petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed.