2016 (5) TMI 886 - HC - VAT and Sales Tax

Seeking directions to pass a fresh assessment order - Assessment order passed without providing the opportunity to the petitioner to prove their case, without verifying the books of accounts and also without conducting an enquiry as contemplated under Section 27(2) of the TNVAT Act - Held that - this Court is of the considered view on the basis of the detailed findings of the respondent that it is crystal clear that the petitioner with an intention to evade payment of tax produced the bogus bills obtained from the so-called dealers, who were not in existence and that their registrations have been cancelled and as there was no transaction of goods, the respondent has passed the impugned order in a detailed manner, after affording an opportunity of being heard to the petitioner. In these circumstances, it is the duty of the petitioner to substantiate their claim by producing their books of accounts and to prove that the dealers from whom purchases were made were in existence and the goods were moved from the place of purchase to the place of the petitioner. Since the petitioner has miserably failed to prove the same, the respondent has passed the impugned order. Also the petitioner without availing the statutory remedy of appeal, has filed this writ petition, which is not maintainable in the absence of any violation of principles of natural justice or where the order under challenge is wholly without jurisdiction or the vires of the statute, is under challenge. Validity of impugned order - passed in violation of principles of natural justice - denied the opportunity of being heard to the petitioner - Held that - on perusal of the averments, the contention of the learned Counsel for the petitioner that no opportunity of personal hearing was given to the petitioner cannot be accepted and in the well-considered opinion of this Court that the impugned order was not passed in violation of principles of natural justice. Further, when the alternative statutory remedy is available, the writ petition cannot be entertained, except for the enforcement of any of the fundamental rights or where there has been a violation of the principles of natural justice or where the order under challenge is wholly without jurisdiction or the vires of the statute is under challenge. Further, if effective and adequate opportunity was given to the dealers before passing the final assessment orders and principles of natural justice are not violated, the dealers can very well put to challenge the assessment orders of the authority concerned only before the appellate authority. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. Therefore, since the petitioner has approached this Court by way of this writ petition without exhausting the alternative statutory remedy of appeal, while dismissing the writ petitions, liberty is granted to the petitioner to approach the appellate authority, if they desire so, within 30 days from the date of receipt of a copy of this order. - Decided against the petitioner

Issues Involved:
1. Reversal of Input Tax Credit (ITC)
2. Allegations of Bill Trading and Non-Existence of Sellers
3. Legality of the Assessment Orders
4. Violation of Principles of Natural Justice
5. Availability of Alternative Remedy

Issue-Wise Detailed Analysis:

1. Reversal of Input Tax Credit (ITC):
The petitioner, a registered dealer in SS Circles, SS Patti, and SS Magnet Sheets, claimed ITC on purchases made from local registered dealers. The Enforcement Wing Officials of the Commercial Taxes Department inspected the petitioner's business and alleged that the sellers did not report their sales to the petitioner, leading to a reversal of ITC for the assessment years 2012-2013 and 2013-2014. The respondent issued notices proposing to reverse the ITC of Rs. 74,14,788/- and Rs. 32,84,468/- respectively, without conducting an enquiry as required under Section 27 of the TNVAT Act. The petitioner argued that the registration of the sellers was active at the time of purchase and requested details of the dealers whose Registration Certificates were canceled.

2. Allegations of Bill Trading and Non-Existence of Sellers:
The respondent found various defects, including invoice mismatches, purchases from Registration Certificate canceled dealers, and huge tax evasion through bill trading without actual transactions of goods. The respondent concluded that the sellers were issuing invoices without actual transactions, and the burden of proving the genuineness of transactions lay on the petitioner as per Section 17(2) of the TNVAT Act. The petitioner failed to provide sufficient documentary evidence to support their transactions, leading to the reversal of ITC and the imposition of penalties under Section 27(4) of the TNVAT Act.

3. Legality of the Assessment Orders:
The respondent's assessment orders identified several defects, including invoice mismatches, unsupported purchase bills, and purchase omissions. The respondent concluded that the petitioner had indulged in bill trading and evaded tax by procuring bills from non-existent or canceled dealers. The assessment orders were passed after providing opportunities for personal hearings, which the petitioner failed to utilize effectively. The respondent's conclusions were based on detailed findings and cross-verification of transactions, leading to the reversal of ITC and the imposition of penalties.

4. Violation of Principles of Natural Justice:
The petitioner argued that the respondent passed the impugned orders without providing the requested details and documents, and without conducting a proper enquiry. The respondent, however, provided multiple opportunities for personal hearings and requested the petitioner to submit relevant records. The petitioner either failed to appear or did not provide the necessary documents during the hearings. The court concluded that the respondent had not violated the principles of natural justice and had provided adequate opportunities for the petitioner to present their case.

5. Availability of Alternative Remedy:
The court emphasized that when an alternative statutory remedy is available, a writ petition should not be entertained. The petitioner should have exhausted the appeal remedy provided under the TNVAT Act before approaching the court. The court referred to several decisions, including those of the Supreme Court, which upheld the principle that statutory remedies must be availed of before invoking writ jurisdiction. The court dismissed the writ petitions, granting the petitioner liberty to approach the appellate authority within 30 days.

Conclusion:
The court dismissed the writ petitions, highlighting that the petitioner failed to exhaust the alternative statutory remedy of appeal. The respondent's assessment orders were found to be legally sound, based on detailed findings and adequate opportunities for the petitioner to present their case. The court reiterated the importance of exhausting statutory remedies before seeking relief through writ petitions.

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