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Subha Shree Hotels, Represented by its Managing Partner, S. Radhakrishnan, Coimbatore v/s The Assistant Commissioner (ST), Ram Nagar Assessment Circle, Coimbatore

    WP. Nos. 7161, 7165 & 7170 of 2019 & WMP. Nos. 7886, 7887 & 7895 of 2019
    Decided On, 24 June 2022
    At, High Court of Judicature at Madras
    For the Petitioner: R. Senniappan, Advocate. For the Respondent: V. Prashanth, Government Advocate.

Judgment Text
(Common Prayer: Writ Petitions filed under Article 226 of the Constitution of India, to issue a Writ of Certiorari, calling for the records on the files of the respondent in TIN No.33161982150/2011-12, TIN No.33161982150/2013-14 and TIN No.33161982150/2012-13 respectively dated 03.01.2019 and quash the same as being without jurisdiction, authority of law and contrary to the principles of natural justice.)

Common Order

1. These writ petitions assail three orders of assessment for the period 2011-12, 2012-13 and 2013-14 all dated 03.01.2019 passed in terms of the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short 'Act'). The petitioner runs a Hotel in Coimbatore. It was earlier falling under single star category, but had lost such categorization post 09.05.2011.

2. While this is so, the premises of the petitioner came to be inspected by the officials of the Enforcement Wing between 10.06.2014 to 22.08.2014. Pursuant thereto, there appear to be certain discrepancies that the inspection officers allege to have found, such as non-reporting of turnover in the monthly returns of the petitioner.

3. A show cause notice thus came to be issued to the petitioner on 25.05.2016 referring to the discrepancies found in the course of inspection and proposing various additions to the turnover by way of suppression and equal time addition for probable omission. In the absence of profit and loss account, penalty was also proposed in terms of Section 27(3)(c) of the Act.

4. The petitioner has admittedly filed a detailed response dated nil assailing the proposed additions. They have specifically averred that the star status was granted only for the period 10.05.2006 to 09.05.2011 as per star classification order issued by the Regional Director and Convener of the Hotel and Restaurant Approval and Classification Committee (HRACC South) dated 10.05.2006. They specifically deny the allegation of accreditation with star status for any other period and seek a copy of such order, if such order is in possession of the Department.

5. As regards the proposal of addition on the ground of assumed suppression and an equal time addition, they maintain that their books of accounts are being regularly updated and reflect the proper position in regard to the turnover. References has also been made to decide the cases frowning upon such additions in the absence of any substantive material to indicate suppression.

6. While this is so and notwithstanding the detailed submissions made, the impugned orders of assessment have come to be passed which are in my considered view, cryptic, non-speaking and also erroneous both in law and on fact.

7. The officer refers to a notice dated 18.07.2018, which the petitioner states it never received. Dehorse this aspect of the matter, the petitioner's detailed reply is admittedly on file and this ought to have been taken note of in framing the assessments. There is no reference whatsoever to the submissions made by the petitioner on either count.

8. The petitioner has circulated a copy of the order of India Tourism-Chennai dated 24.08.2016 stating categorically that the classification under one star category was with effect from 10.05.2006 for a period of five years, valid till 09.05.2011. Subsequently, the star categorization has not been extended.

9. This would establish the error in the Assessing Authority levying the enhanced rate of taxation since the provisions of Section 7 are categoric to the effect that those Restaurants which are not star rated must be taxed only at the lower rate of 5%. Section 7, dealing with levy of taxes on food and drinks states in clause (a) that turnover earned by star hotels shall attract tax at the rate of 14.5% while other dealers shall be taxed at the rate of 5%. The position as regards taxability is categoric and answered, accordingly, in favour of the petitioner.

10. With regard to the proposal relating to suppression and equal time addition, the petitioner's detailed reply has been entirely ignored though received by the respondent. I also find the contents of the reply contain merit in so far as the petitioner has clearly submitted that it maintains accounts and the reliance upon the case law is also well founded.

11. This Court has been consistently taking the view that turnover to be brought to tax must be based on some material found and in the cases of Jayalakshmi Oil Mills Vs.

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The State of Tamilnadu [(2013) 58 VST 535] and Sri Ramu Furniture Co. Vs. State of Tamil Nadu [(2013) 57 VST 383] and S.V.Cycles Stores Vs. Commercial Tax Officer [(2011) 46 VST 565], identical proposals have been quashed. 12. In light of the discussion as aforesaid, the second issue is also held in favour of the petitioner and adverse to the revenue. The impugned orders of assessment are quashed and these writ petitions are allowed. No costs. Connected miscellaneous petitions are closed.