2019 (4) TMI 528 - HC - VAT and Sales Tax

Validity of pre revision notice - TNVAT Act - alleged sales suppression committed by the petitioner - according to the petitioner, at the time of inspection by the Enforcement Wing Officials of the respondent, they have illegally calculated a sum of ₹ 50,000/- as advance tax from the petitioner - Held that - In the instant case, the Enforcement Wing Officials have collected the advance tax during the time of inspection itself, even before the show cause notice was issued to the petitioner for revision of assessment proceedings. But that cannot be a ground for quashing the impugned pre revision notice as the pre revision notice calls upon the petitioner to pay a sum of ₹ 4,12,275/- which is in excess to the sum of ₹ 50,000/- which was collected by the Enforcement Wing Officials of the respondents from the petitioner during the time of inspection. It is settled law that the show cause notice cannot be challenged under Article 226 of the Constitution of India unless and until, the same has been issued without authority under law or without jurisdiction. In the case on hand, the respondents has got the power to issue notice under Section 27 of the TNVAT Act, 2006 for revision of assessment proceedings. Therefore, the petitioner has not satisfied any of the grounds required for quashing of the pre revision notice under Section 27 of the TNVAT Act, 2006 - However, considering the fact that the respondents have collected a sum of ₹ 50,000/- from the petitioner as advance tax at the time of inspection of the petitioner s premises, which they are not legally entitled to, the said will have to be adjusted as and when the final assessment order is passed. Petition dismissed.

Summary

Issues:
Challenge to pre revision notice under TNVAT Act, 2006 for assessment year 2012-13.

Analysis:
The petitioner, a registered dealer under TNVAT Act, 2006, challenged a pre revision notice issued by the respondent for alleged sales suppression. The petitioner claimed that a sum of ?50,000 was illegally calculated as advance tax during an inspection. The petitioner sought to quash the notice and refund the advance tax amount. The respondent proposed revising the assessment for the year, demanding ?4,12,275 as tax for sales suppression.

The petitioner argued that the collection of ?50,000 by Enforcement Wing Officials was unlawful, citing a Division Bench judgment that officials cannot collect tax during audits. The respondent contended that the notice was a show cause notice and premature challenge was not maintainable. The respondent assured to consider objections and pass final orders in accordance with the law.

The court noted that while the Enforcement Wing collected advance tax before issuing the notice, it did not invalidate the notice itself. The court emphasized that a show cause notice cannot be challenged under Article 226 unless issued without authority or jurisdiction. The court found no grounds to quash the notice but directed the respondent to allow the petitioner to file objections, grant a personal hearing, and consider the Division Bench judgment.

Ultimately, the court disposed of the writ petition, instructing the respondent to permit the petitioner to file objections and pass final orders within eight weeks, considering the legal precedent. The court highlighted the importance of allowing the petitioner to raise objections and ensuring a fair process, without awarding costs to either party.