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

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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].

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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

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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

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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

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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.

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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;

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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

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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:

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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) –

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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

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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.'

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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

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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

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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

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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

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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

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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

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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.'

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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

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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

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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

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