Madras High Court
Madras Engineering Industries Private ... vs The Assistant Commissioner (Ct) on 25 October, 2024
Author: C.Saravanan
Bench: C.Saravanan
W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 25.10.2024
CORAM :
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021
and
W.M.P.Nos.27847, 27848, 27849, 27852 and 27853 of 2021
Madras Engineering Industries Private Limited,
Represented by its Director Priya Sriram,
No.C-6, Ambattur Industrial Estate,
Ambattur, Chennai - 600 058. ... Petitioner in all W.Ps
Vs.
1.The Assistant Commissioner (CT),
Anna Nagar Assessment Circle,
1-B Lakshmipuram 2nd Street,
Villivakkam, Chennai – 600 049.
2.The Assistant Commissioner (ST),
Ambattur Industrial Estate Assessment Circle,
Room No.327, 3rd Floor Veterinary Hospital Road,
Nandanam, Chennai – 600 035.
3.The Principal Secretary/
Commissioner of Commercial Taxes,
Chepauk, Chennai – 600 005. ... Respondents in all W.Ps
Prayer in W.P.No.26378 of 2021: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
on the files of the Second Respondent herein in TIN/33861320031/2010-2011
dated 27.09.2021 quashing the same.
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W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021
Prayer in W.P.No.26380 of 2021: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
on the files of the Second Respondent herein in TIN/33861320031/2011-2012
dated 17.09.2021 quashing the same.
Prayer in W.P.No.26383 of 2021: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
on the files of the Second Respondent herein in TIN/33861320031/2012-2013
dated 08.10.2021 quashing the same.
Prayer in W.P.No.26384 of 2021: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
on the files of the Second Respondent herein in TIN/33861320031/2013-2014
dated 08.10.2021 quashing the same.
Prayer in W.P.No.26387 of 2021: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorari, to call for the records
on the files of the Second Respondent herein in TIN/33861320031/2014-2015
dated 08.10.2021 quashing the same.
For Petitioner : Ms.Vishnu Priya
(In all W.Ps) for Mr.N.Inbarajan
For Respondents : Ms.Amirtha Poonkodi Dinakaran
(In all W.Ps) Government Advocate
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W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021
COMMON ORDER
These Writ Petitions are of the year 2021.
2. This is the second round of litigation before this Court.
3. Earlier, the petitioner had suffered five Assessment Orders for the Assessment Years 2010-2011 to 2014-2015 on 07.02.2017. The dispute in this case pertains to wrong availment of Input Tax Credit pursuant to the mismatch noticed between the Input Tax Credit availed by the petitioner and the documents that were filed during the assessment.
4. This Court by an Order dated 16.03.2017 in W.P.Nos.6381 to 6386 of 2017 had set aside the Assessment Orders dated 07.02.2017 for the aforesaid Assessment Years and remitted the case back to the respondents to pass a fresh order de novo. Pursuant to the same, the Impugned Assessment Orders have been passed wherein the Input Tax Credit wrongly availed has been affirmed.
5. Apart from the above, penalty under Section 27(4) of the Tamil Nadu Value Added Tax (TNVAT) Act as it stood prior to 29.01.2016 by Section 11 https://www.mhc.tn.gov.in/judis 3/10 W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021 of the Tamil Nadu Value Added Tax (Second Amendment) Act, 2015 (No.13 of 2015) has been imposed at 15%.
6. Learned counsel for the petitioner submits that the tax as also penalty has been paid under protest and therefore submits that the imposition of penalty under Section 27(4)(i) of TNVAT Act as it stood during the period in dispute has been wrongly imposed. It is further submitted that there is no scope for imposing penalty under Section 27(4) of TNVAT Act either before the amendment or after the amendment as there was no useful suppression of fact on the part of the petitioner in availing Input Tax Credit and that the discrepancy has arisen only on account of the information gathered by the Department and that the amount that was earlier sought to be levied was also drastically reduced in the Impugned Assessment Orders.
7. Learned Government Advocate for the respondents on the other hand submits that there is no merits in the present writ petition.
8. Learned Government Advocate for the respondents also referred to Circular No.5/2021 dated 24.02.2021 issued by the Principal https://www.mhc.tn.gov.in/judis 4/10 W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021 Secretary/Commissioner of Commercial Taxes, Chepauk, Chennai, wherein it has been clarified that Paragraph 3.3.3 and 3.3.4 of Circular No.5/2021 of the Principal Secretary/Commissioner of Commercial Taxes, Chepauk, Chennai has been followed.
9. Learned Government Advocate for the respondents submits that the conditions of the above circular was complied as cross-verification was carried out as per Paragraph 3.3.3 and 3.3.4 of the above Circular.
10. In this connection, the learned Government Advocate for the respondents has referred to the communications between the Assistant Commissioner (ST), Ambattur Industrial Estate Assessment Circle, Nandanam, Chennai and the Assistant Commissioner (ST), Aminjikarai Circle, F 50, Anna Nagar East, 1st Avenue, Chennai, before confirming the demand in the Impugned Assessment Orders and submits that imposition of penalty cannot be interfered with.
11. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Government Advocate for the respondents. https://www.mhc.tn.gov.in/judis 5/10 W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021
12. The dispute has arisen on account of mismatch as a result of which, the Input Tax Credit was sought to be denied to the petitioner. Earlier, on 16.03.2017 it was subject matter of challenge before this Court in W.P.Nos.6381 to 6386 of 2017. This Court had taken note of the difficulties faced by the assessee in M/s.JKM Graphics Solutions Private Limited, Chennai Vs. The Commercial Tax Officer, Vepery Assessment Circle, Chennai and others, in W.P.No.105 of 2016 dated 01.03.2017, (2017) 99 VST 343 (Mad.)., wherein, this Court had given certain directions pursuant to which, Circular No.5/2021 bearing Ref.No.LVV10/12521/2016 dated 24.02.2021 was issued.
13. Paragraphs 3.3.3 and 3.3.4 of the above Circular read as under:-
3.3.3 3.3.4 If the Original Assessing The Other End Assessing Authority is unable to resolve Authority shall verify the details either the whole or part of the provided to him / her with mismatch, then the Original reference to the manually filed Assessing Authority shall issue original / revised returns or by notice to the dealer concerned issuing show cause notice and indicating the discrepancy with an calling for the details from the opportunity to show cause to dealer. After the receipt of reply reconcile the same. After the and after due enquiry, the Other receipt of reply and after due End Assessing Authority finds https://www.mhc.tn.gov.in/judis 6/10 W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021 3.3.3 3.3.4 enquiry, the Original Assessing that the seller has reported the Authority finds that the seller has transaction and paid the tax due effected the transaction shall shall report the same to Original make a request to Other End Assessing Authority and both of Assessing Authority through them shall drop further email (zimbra mail) marking copy proceedings and on the other to concerned DC and JC and seek hand that if the whole or part of for the requisite details of the transactions are not reported verification. If on enquiry by the seller, then shall initiate Original Assessing Authority is of assessment proceedings against the view buyer has made bogus the seller and shall pass claim / wrong claim, by being appropriate orders in accordance involved in bill trading by with provisions of the TNVAT producing bogus invoice, etc., the Act, 2006. The result of such buyer shall be assessed to tax / action shall be reported to the reversal of ITC, as the case may Original Assessing Authority.
be, then the Original Assessing Authority shall pass appropriate orders in accordance with provisions of the TNVAT Act, 2006.
14. A reading of Section 27(4) of TNVAT Act indicates that both before amendment and after amendment there is no scope for any discretion. The petitioner has availed Input Tax Credit which was sought to be denied based on the information gathered by the Commercial Tax Department from the checkpost and web portal.
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15. The informations gathered were not correct and therefore the Court intervened and gave its direction in M/s.JKM Graphics Solutions Private Limited's case (cited supra).
16. Although Sub-Section 4 to Section 27 of TNVAT Act leaves no scope for discretion in the matter of levy of penalty, this Court is of the view that the present case cannot be strictly fit into the penalty as the tax itself has been confirmed pursuant to information gathered from checkpost which is not conclusive of mistakes.
17. The Input Tax Credit has been confirmed only pursuant to the exercise carried out by the Assessing Officer pursuant to Order dated 16.03.2017 in W.P.Nos.6381 to 6386 of 2017 in the light of Circular No.5/2021 bearing Ref.No.LVV10/12521/2016 dated 24.02.2021.
18. The petitioner has also paid the disputed tax and is only confining the issue regarding the levy of penalty.
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19. Since this case cannot be strictly covered within the purview of Section 27(4) of TNVAT Act although there has been determination under Section 27(2) of TNVAT Act, imposition of penalty cannot be justified. Under these circumstances, the Impugned Assessment Orders dated 07.02.2017 are partly set aside insofar as the imposition of penalty on the petitioner is concerned.
20. These Writ Petitions are allowed to the extent with consequential relief. No costs. Connected Writ Miscellaneous Petitions are closed.
25.10.2024 Index : Yes/No Internet : Yes/No Speaking Order/Non-Speaking Order Neutral Citation : Yes/No arb https://www.mhc.tn.gov.in/judis 9/10 W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021 C.SARAVANAN, J.
arb To
1.The Assistant Commissioner (CT), Anna Nagar Assessment Circle, 1-B Lakshmipuram 2nd Street, Villivakkam, Chennai – 600 049.
2.The Assistant Commissioner (ST), Ambattur Industrial Estate Assessment Circle, Room No.327, 3rd Floor Veterinary Hospital Road, Nandanam, Chennai – 600 035.
3.The Principal Secretary/ Commissioner of Commercial Taxes, Chepauk, Chennai – 600 005.
W.P.Nos.26378, 26380, 26383, 26384 and 26387 of 2021 25.10.2024 https://www.mhc.tn.gov.in/judis 10/10