Tvl.Cfc Agency vs The Appellate Deputy Commissioner (St)

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 10.01.2022 CORAM THE HON'BLE MR. JUSTICE M.SUNDAR W.P(MD)No.333 of 2022 and W.M.P.(MD)No.255 of 2022 Tvl.CFC Agency, Rep. By its Partner Mr.Mohamed Abdul Kader, Son of Mr.Mohideen Abdul Kader, No.227, Maraikkarpalli Street, Kayalpattinam, Tutocorin District – 628 204. ...Petitioner -Vs- 1.The Appellate Deputy Commissioner (ST), Commercial Taxes Buildings, Palayamkottai, Tirunelveli. 2.The State Tax Officer, Thiruchendur. ... Respondents Prayer: Writ Petition filed under Article 226 of Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records pertaining to the impugned proceedings passed by the 2nd respondent in TIN: 33594901441/2012-13, dated 14.01.2020 and quash the same as the same is passed without conducting any enquiry with the other end dealvers in view 1/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 of the decision rendered by this Honourable High Court in W.P.No.105 of 2016, dt. 01.03.2017 in the case of M/s.JKM Graphics Solutions (P) Ltd., Chennai and other (Batch cases) reported in [2017] 99 VST 343 and thus the order was passed by grossly violating the Principles of Natural Justice and to redo the assessment after providing the petitioner an opportunity of personal hearing. For Petitioner : Mr.A.Satheesh Murugan For Respondents : Mr.T.Amjadkhan, Government Advocate for M.Lingadurai, Special Government Pleader. ORDER Captioned writ petition has been filed assailing an 'order dated 14.01.2020 bearing reference TIN:33594901441/2012-13 made by the second respondent' (hereinafter 'impugned order' for the sake of brevity, convenience and clarity). 2. The impugned order has been made under Section 27 of 'Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu Act 32 of 2006)' [hereinafter 'TNVAT Act' for the sake of brevity, convenience and clarity]. 2/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 3. Mr.A.Satheesh Murugan, learned counsel on record for writ petitioner and Mr.T.Amjadkhan, learned Government Advocate representing Mr.M.Lingadurai, learned Special Government Pleader, who accepts notice on behalf of both the respondents are before this Court, with the consent of learned counsel on both sides main writ petition was taken up, heard out, owing to the short point involved and the narrow compass on which the captioned main writ petition turns. 4. Owing to the narrow compass on which captioned matter turns, short facts will suffice. Short facts shorn of particulars not imperative for appreciating this order are that the writ petitioner is a dealer under TNVAT Act; that there was deemed assessment qua writ petitioner under Section 22(2) of TNVAT Act for the 'Assessment Year 2012-13' (hereinafter 'said AY' for the sake of convenience and clarity); that post such deemed assessment, the Assessing Officer i.e., the second respondent found that large scale purchase omissions have been made by the dealer qua said AY; that the second respondent treated such purchase omissions as sales suppression and issued pre-revision notice (by resorting to Section 27 of TNVAT Act) i.e., pre-revision notice dated 26.12.2018; that the writ 3/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 petitioner sent a terse reply made up of three short sentences without any enclosures; that the second respondent Assessing Officer thereafter issued yet another notice dated 14.05.2019 for which the dealer did not reply; that the Assessing Officer (second respondent) gave one more opportunity by issuing another notice dated 24.09.2019 fixing a personal hearing on 03.10.2019 at 12.30 p.m., but the writ petitioner-dealer neither replied nor attended the personal hearing; that thereafter, the second respondent Assessing Officer made the impugned order under Section 27 of TNVAT Act; that post impugned order there was a lull i.e., after keeping quiet for nearly two years, captioned writ petition has been filed on 04.01.2022. 5. In the aforementioned fact setting, learned counsel for writ petitioner in his campaign against the impugned order, notwithstanding very many averments made in the writ affidavit, notwithstanding several grounds raised in the writ affidavit, in the hearing made two pointed submissions and they are as follows: a) JKM Graphics principle vide JKM Graphics Solutions Private Limited Vs. CTO reported in (2017) 99 VST 343 (Mad) has not been adhered to as particulars qua 4/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 the dealers at the other end have not been compared and it is a case of mismatch as Annexure-I and Annuxre-II have not been compared. As an extension of this argument, reference was also made to an order dated 11.12.2018 made in W.P. (MD)No.24287 of 2017 in what is known as Mangalam Stores case; and b) the writ petitioner-dealer was not given opportunity to cross examine dealers at the other end and documents were not supplied. 6. In response to the aforementioned arguments of the learned counsel for writ petitioner, learned State Counsel made the following submissions: a) the writ petitioner has sent a terse three sentences reply to the pre-revision notice and not even sent any enclosures much less asked for cross examination; b) the writ petitioner has not availed of the multiple opportunities given to him after the pre-revision notice, as 5/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 the Assessing Officer sent another notice i.e., a second notice dated 14.05.2019 for which the writ petitioner did not reply. Notwithstanding this, the Assessing Officer sent one more notice dated 24.09.2019 fixing personal hearing on 03.10.2019 at 12.30 p.m., but the writ petitioner neither replied nor availed the personal hearing; c) the Assessing Officer, notwithstanding the above scenario has done verification and the whole process is based on further verification and therefore, it cannot be gain said that JKM Graphics principle or Mangalam Stores case ratio has been given a go by; and d) there is an alternate remedy for the writ petitioner by way of a statutory appeal under Section 51 of TNVAT Act. 7. By way of reply, learned counsel for writ petitioner, besides reiterating his submissions made in the opening arguments, submitted that one more opportunity should be given to the writ petitioner. 6/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 8. This Court carefully considered the rival submissions in the light of the fact setting that has been captured supra and after analysing the rival submissions in the backdrop of the fact setting, this Court is of the considered view that this is not a fit case for acceding to the prayer of the writ petition or in other words, this is not a fit case for interfering in the impugned order in writ jurisdiction and the reasons are as follows: a) in the case on hand, the writ petitioner has approached this Court nearly two years after the impugned order. The impugned order is dated 14.01.2020, it has admittedly been served on the writ petitioner in February 2020 (though the exact date is not readily available with the learned counsel) but the writ petition has been filed only on 04.01.2022. This delay remains unexplained (other than faintly saying that there was Corana Virus pandemic). This is hardly an explanation as the Court continued to function over the last two years in virtual, hybrid and some time personal modes also; 7/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 b) the two judgments viz., JKM Graphics and Mangalam Stores are clearly distinguishable on facts qua the case on hand. One distinguishing factor is, in JKM Graphics, the Court proceeded on the basis of the contention /submission that if a proper enquiry had been conducted, the purchasing dealer would have been in a position to establish the genuineness of the transaction and prove, show and demonstrate that the proposal to reverse ITC is not sustainable. This is captured in one of the paragraph at page 365 of JKM Graphics case law as reported in (2017) 99 VST 343 (Mad). In page 365 placitum 25 reads as follows: '..... It is therefore their submission that if a proper enquiry had been conducted, the purchasing dealer would have been in a position to establish the genuineness of the transaction and prove, show and demonstrate that the proposal to reverse ITC is not sustainable......' After the above i.e., after hearing both sides, in the course of discussion and dispositive reasoning below placitum 26 8/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 in the same page in the next paragraph Hon'ble Court has held as follows: 'Heard the learned counsels appearing for the parties and perused the materials on record.' In the case on hand, as would be evident from the facts above, writ petitioner has sent only a three sentence terse reply without any enclosures to the first pre-revision notice and thereafter not replied to the second pre-revision notice dated 14.05.2019 and has not availed of the personal hearing though it was granted vide notice dated 24.09.2019 (fixing personal hearing on 03.10.2021 at 12.30 p.m.). The terse reply sent by the writ petitioner to the first revision notice dated 26.12.2018 is as follows: 9/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 Before proceeding further it is pertinent to remind oneself that this Court has already held in SBI Officer's association case [State Bank of India Officer's Association (CC) – 10/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 SBIOA Vs. The Assistant Commissioner (ST), Chennai], being order dated 01.08.2019 in W.P.No.22634 of 2019 that for proceedings under Section 27 of TNVAT Act in the light of the common proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act, a personal hearing is not statutorily imperative. This Court has held that it will suffice if sufficient opportunity to show cause is given. That view was taken in the light of difference in language qua proviso to Section 22(4) of TNVAT Act and the common proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act. This order was carried in appeal by Revenue by way of an intra Court appeal vide W.A.No.4073 of 2019 and a Hon'ble Division Bench of this Court vide order dated 16.12.2019 dismissed the writ appeal of the Revenue. Therefore, a personal hearing is not statutorily imperative qua a section 27 TNVAT Act drill. Though personal hearing is not statutorily imperative for a legal drill under Section 27 of TNVAT Act, the second respondent Assessing Officer has offered a personal hearing also to the writ 11/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 petitioner in the case on hand. To be noted, in the SBI Officer's Association case, this Court has made it clear that granting personal hearing is at the discretion of the Assessing Officer. In this case, the dealer has not availed of the personal hearing and has casually come to this Court after two years of the impugned order and submits that the procedure has not been followed. Therefore unlike JKM Graphics facts in the case on hand it is nobody's case that there was no proper enquiry. In this view of the matter case on hand stands distinguished on facts qua JKM Graphics case law. In the same view of the matter, Mangalam Stores case law also stands distinguished on facts. The reason is paragraph 3 of Mangalam Stores case law, which reads as follows: '3.Records relating to payment of money for each and every delivery. The petitioner also wanted to cross examine those based on whose returns the petitioner was sought to be saddled liability. Rejecting the stand of the petitioner, the impugned order came to be passed. The same is assailed in this writ petition.' 12/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 The above will make it clear that on facts Mangalam stores is a case where the petitioner sought for cross examination of those based on whose returns the petitioner's was saddled with the liability and the same was rejected in passing the impugned order. There is no such situation here and on the contrary in the case on hand adequate / ample opportunities including personal hearing which is optional given by the second respondent Assessing Officer has not been availed by the writ petitioner. Therefore, both JKM Graphics case and Mangalam Stores case are clearly distinguishable on facts qua the case on hand. In this view of the matter, both the case laws are do not come to the aid of the writ petitioner in the case on hand. This douses the first and sheet anchor argument of the learned counsel for the writ petitioner; c) The argument of the learned State Counsel that there has been further verification cannot be completely brushed aside. These are matters which turn on facts and 13/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 examination of records could have well be done in statutory appeal. Writ petitioner has bypassed the statutory appeal and has come to this Court that too two years post impugned order with the captioned writ petition. Therefore, this also weighs against the writ petitioner in the case on hand; d) There is an alternate remedy qua impugned order by way of a statutory appeal under Section 51 of TNVAT Act. As already alluded to supra, the matter may turn on facts when it comes to examination of records as to the verification done. The appellate authority could have always look into these matters. There is no reason much less a tenable or acceptable reason that has been set out in the case on hand as to why the writ petitioner has not availed the alternate remedy. This takes this Court to the alternate remedy rule. Alternate remedy rule no doubt is not an absolute rule. It is a rule of discretion. It is not only a rule of discretion but it is a self imposed restraint qua writ 14/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 jurisdiction. However, Hon'ble Supreme Court in a long line of authorities starting from Dunlop India case [Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd., and others reported in (1985) 1 SCC 260] has repeatedly held that the alternate remedy rule has to be strictly enforced with utmost rigour when it comes to fiscal Statutes. The other case laws are Satyawati Tandon [United Bank of India Vs. Satyawati Tondon and others reported in (2010) 8 SCC 110] and K.C.Mathew [Authorized Officer, State Bank of Travancore and another Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevant paragraph in Dunlop case law is paragraph No.3 and relevant portion of the same reads as follows: '3. ....... Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the 15/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.' (Underlining made by this Court to supply emphasis, highlight and for ease of reference) e) Satyawati Tandon principle was reiterated by Hon'ble Supreme Court in K.C.Mathew case. Relevant paragraph in K.C.Mathew case law is paragraph 10 and the same reads as follows: '10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate 16/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp.123 & 128, Paras 43 & 55) “43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 55.It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies 17/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.' (underlining made by this Court to supply emphasis, highlight and for ease of reference) f) One other case law of significance is a recent judgment of a three member Bench of Hon'ble Supreme Court in Commercial Steel Limited case [Civil Appeal No 5121 of 2021, The Assistant Commissioner of State Tax and Others Vs. M/s Commercial Steel Limited]. The three member Bench of the Honble Supreme Court speaking through Hon'ble Justice Dr.Dhananjaya Y Chandrachud, set out the exceptions to the rule of alternate remedy and made it clear that only in exceptional cases (where the exceptions are attracted), there would be interference in writ jurisdiction. Relevant paragraphs in Commercial Steel 18/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 Limited case law are paragraph Nos.11 and 12, which read as follows: '11 The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. 12. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was CA 5121/2021 7 not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent.' 19/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 In this regard i.e., with regard to exceptions this Court also reminds itself about Whirlpool case law being Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and others reported in (1998) 8 SCC 1. Whirlphool case law is such an oft quoted case law that the same has to stay in litigation parlance as 'Whirlpool exceptions'. Relevant paragraph in Whirlpool case law is paragraph 15 and the same is as follows: '15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut 20/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.' g) Therefore, the above is not a fit case for interference in writ jurisdiction. h) This Court is also of the considered view that a tax liability case cannot be kept lingering in the first tier before assessing officer when a writ is filed two years post impugned order and when delay remains unexplained. 9. In the light of the aforementioned reasons, which serve as discussion and dispositive reasoning (referred into one) qua rival contentions, the sequitur is captioned writ petition fails and the same is dismissed. Consequently, captioned WMP is also dismissed. There shall be no order as to costs. 10.01.2022 Index : Yes/No Internet : Yes /No vsm 21/22 https://www.mhc.tn.gov.in/judis WP(MD)No.333 of 2022 M.SUNDAR, J. vsm Note : In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate / litigant concerned. To 1.The Appellate Deputy Commissioner (ST), Commercial Taxes Buildings, Palayamkottai, Tirunelveli. 2.The State Tax Officer, Thiruchendur. W.P(MD)No.333 of 2022 and W.M.P.(MD)No.255 of 2022 10.01.2022 22/22 https://www.mhc.tn.gov.in/judis