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TMI Blog2016 (5) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment of Value Added Tax (in short 'VAT') and effect further sales inside the State and claimed Input Tax Credit (in short 'ITC') in its returns and adjusted the same while paying output tax. 2.2. While so, the place of business of the petitioner was inspected by the Enforcement Wing Officials of the Commercial Taxes Department on 04.06.2014 and the inspecting officials alleged that there would be reversal of ITC for the assessment years 2012-2013 and 2013-2014 for the reason that the sellers have not reported their sales to the petitioner and have also not produced the documents as per Section 19(13) of the TNVAT Act. Further, huge quantum of suppression of transactions were unearthed, claiming bill trading transactions. 2.3. The petitioner objected to the allegations of the inspecting officials and refused to sign in the statement, dated 25.8.2014 prepared by them and therefore, it was sent by post to the petitioner, who filed their objections. 2.4. However, according to the petitioner, without conducting an enquiry as contemplated under Section 27 of the TNVAT Act, the respondent had straight away issued notices, dated 20.02.2015 for the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 14.09.2015 along with the books of accounts as required by the respondent in the notice, dated 01.09.2015. 2.10. Claiming that the respondent without providing the details sought for by the petitioner and without giving them any opportunity to prove their case, has passed the impugned orders, the petitioner has come forward with the above writ petitions. 3. Heard Mr.P.Rajkumar, learned Counsel appearing for the petitioner and Mr.S.Monaharan Sundaram, learned Additional Government Pleader appearing for the respondent. 4. The learned Counsel for the petitioner has contended that the respondent is wrong in passing the impugned orders without verifying the books of accounts of the petitioner and also without conducting an enquiry as contemplated under Section 27(2) of the TNVAT Act. 5. Further, he contended that without providing the details and documents requested by the petitioner in their objections, dated 12.05.2015 and 22.06.2015 and also in the written submissions, dated 14.09.2015, the respondent ought not to have passed the impugned orders. 6. He also submitted that without conducting an enquiry as contemplated under Section 81 of the TNVAT Act and without calling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the TNVAT Act, 2006 and following the principles laid down by the Apex Court as well as this Court, the petitioner should have exhausted the appeal remedy without coming forward with this writ petition, which is not maintainable, as there is no question of law involved or principles of natural justice is violated. 13. I have carefully considered the afore said submissions made on either side and perused the impugned orders of the respondent. 14. Since the fate of these writ petition lies on the fate of the impugned orders, dated 30.11.2015 and 15.12.2015, it is imminent for this Court to decide the legality of the same. 15. A careful perusal of the impugned orders reveals the following defects: a. Invoice Mis-match b. Purchases effected from Registration Certificate cancelled Dealers c. Cross Verification revealed huge evasion of tax. d. Purchase Omission e. Bill trading, without payment of tax. 16. In respect of Defect No.1, the respondent has found that the dealers have effected purchases from the dealers who have not filed the returns or reflected the sales in their returns and therefore, the ITC availed by the dealers under Section 27(2) of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely issued bills and invoices without any actual transaction of goods and issuing bills and invoices. Further, the respondent concluded that the contention of the dealers that they have furnished the original invoices as per Section 19(1) of the Act and eligible to avail the ITC as per Section 19(10)(a) and Rule 10(2) of the Act and Rules, is not acceptable and it is for the dealers to prove the burden of proof for the claim of ITC under Section 17(2) of the TNVAT Act, 2006. Further, the ITC availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to be incorrect, incomplete or otherwise not in order, as per Section 19(16) of the Act. In these circumstances, the ITC availed by the dealers is reversed as per Section 27(2) of the Act. 21. Similarly, the respondent has dealt with Defect No.2 and come to the conclusion that the contentions of the dealers are not acceptable for the reason that the ITC availed by the dealer is only provisional and the assessing officer is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order as per Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ua-non for any contract of sale which is absent in this case. Further, it is stated that mere sale invoices alone are not enough to prove transaction of goods from the dealer to the customers, but other evidence for payment and transport documents are quite necessary that the dealer had really transacted the goods to his customer's place, with reference to which, he has to claim ITC by producing the purchase bills depicting sufferance of tax at earlier stage. 25. It is seen that the petitioner i.e., purchaser has failed to furnish the evidences of actual transaction of goods in respect of the transactions, they entered into. Accordingly, the provisions of Section 19(15) of the TNVAT Act have been invoked in reversing the illegal claim of ITC. 26. With regard to Defect No.3, the respondent arrived at the conclusion that the burden of proving the genuineness of transaction lies on the petitioner as per Section 17(2) of the TNVAT Act, 2006. Since, the petitioner's vendors have issued only bills and invoices and not really transacted the goods and also some of the dealers have not filed the returns and filed the returns incorrect/incomplete, there was difference in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ninety Lakhs Seventy Four Thousand and Ninety Five only). Therefore, according to the respondent, the entire claim of ITC is incorrect and ineligible and thus, to be reversed under Section 27(2) of the TNVAT Act, 2006. 30. Thus, it is very clear that the dealers have paid tax of Rs. 55,402/- (Rupees Fifty Five thousand and four hundred and two only) for the entire sales turnover of Rs. 109,24,15,035 (Rupees One Hundred Nine Crores, Twenty Four Lakhs Fifteen thousand and Thirty Five only) and adjusting ITC of Rs. 5.91 Crores for the year 2012-13 and the dealers have evaded payment of output tax in this State by procuring local bills from Bill Traders/Cancelled Dealers/Stopped Business dealers and availed/adjusted the ITC against their local sales effected for Rs. 109.24 Crores. 31. Therefore, the entire ITC of Rs. 5,90,74,095/- (Rupees Five Crores Ninety Lakhs Seventy Four thousand and Ninety Five only) has been reversed under Section 27(2) of the TNVAT Act, 2006. 32. In respect of Defect No.4, the respondent has concluded that with regard to sales suppression of inter-state purchase of Rs. 9,59,56,584 and proposing to higher rate of tax at 14.5% of Rs. 1,38,55,705, the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this Court in the case of GOVINDAN & CO. VS. STATE OF TAMIL NADU (1975) 35 STC 50, which has been subsequently confirmed by the Supreme Court in STATE OF TAMIL NADU VS. RAMAN & CO. reported in (1994) 93 STC 1994 is also to the same effect. In the absence of any materials placed by the petitioner to prove the contrary either before the authorities or even before this Court, there is no scope for interference by this Court." (ii) The State of Tamil Nadu rep. by The Deputy Commissioner (CT), Chennai (North) Division v. Tvl. Gupta Iron and Steel Company [Tax Case (Revision) Nos.1361 and 1362 of 2006, decided on 19.01.2012], wherein the Division Bench of this Court has held thus: "6. .....The assessing authority also factually found that the registration certificates of the dealers in question were cancelled much prior to the purchases effected. Hence, the assessing authority re-determined the total and taxable turnover of the assessee on the ground that no material evidence was produced by the assessee to claim exemption as second sales. This being a factual finding, the first appellate authority has rightly appreciated the issue and also concurred with the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing heard to the petitioner. 36. 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. 37. However, the learned Counsel for the petitioner has placed reliance upon the judgments of this Court, cited supra, to contend that the retrospective cancellation of the dealers would not affect the purchases made from such dealers by the petitioner and that the bills issued by them cannot be held to be bogus bills, however, in the considered opinion of this Court, those decisions would not lend any support to the case of the petitioner. 38. In this connection, it would be more relevant to reproduce the conclusion of the respondent in respect of the Defect No.1, which reads as under: "From the above facts, it is well established that the above dealers are in the habit of issuing the invoices to the dealers/beneficiaries and there was no actual movement of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice, dated 15.5.2015, the petitioner through a letter, dated 9.6.2015 sought for an extension of time to appear for personal hearing. The petitioner thereafter send a written submission, dated 22.6.2015 through its Assistant Manager to the respondent. Since the respondent had refused to receive the same, it was sent through the registered post on 23.6.2015 to the respondent." 43. Whereas the respondent, in the impugned order, has stated as under: "The objections raised by the dealer in their letter, dated 12.5.2015 have been considered carefully with regard to the contentions raised in the notice, dated 20.2.2015. The dealers have requested for personal hearing in their objections dated 12.5.2015, hence, the dealers were requested to appear in person on 10.6.2015 at 11.30 a.m., along with books of accounts and other connected papers vide this office notice dated 15.5.2015 for check of accounts and also furnishing of the details as requested by them. The dealers did not turn up for personal hearing. A second opportunity of personal hearing and production of all details such as books of accounts, Balance Sheet etc., was also given to the dealers vide this office notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenge is wholly without jurisdiction or the vires of the statute, is under challenge and therefore, viewed from any angle, the present writ petitions cannot be maintained. 47. In this regard, it would be more pertinent to refer to the decisions of the apex Court to have clarity on the point that under what circumstances, a writ petition can be entertained, especially, when the alternative efficacious remedy is available. 48. In Union of India and others vs. Major General Shri Kant Sharma and another reported in (2015) 6 Supreme Court 773, while speaking on behalf of the Division Bench of the Apex Court, the Hon'ble Mr.Justice Sudhansu Jyoti Mukhopadhaya, after referring to the following decisions, has observed as under: "28. In Kanaiyalal Lalchand and Sachdev and others vs. State of Maharasthra and others, (2011) 2 SCC 782, this Court considered the question of maintainability of the writ petition while an alternative remedy is available. This Court upheld the decision of the Bombay High Court dismissing the writ petition filed by the appellants therein on the ground of existence of an efficacious alternative remedy under Section 17 of SARFASI Act and held: "23. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute which at the same time gives a special and particular remedy for enforcing it. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to. The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd. and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd. and Secy. Of State v. Mask and Co. It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine. 14. In Mafatlal Industries Ltd. v. Union of India B.P. Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77) "77. So far as the jurisdiction of the High Court under Article 226 or for that matter, the jurisdiction of this Court under Article 32 is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of ICI India Ltd. In any event the High Court ought to have referred to the ratio of the decision in the said case. That judicial discipline has not been adhered to. Looked at from any angle, the High Court's judgment is indefensible and is set aside." 50.2. A Constitution Bench of the Supreme Court in G.Veerappa Pillai v. Raman and Raman Ltd., reported in AIR 1952 SC 192 held that as the Motor Vehicles Act is a self contained code and itself provides for a forum for appeal/revision, the writ jurisdiction should not be invoked in matters relating to its provisions. A similar view was taken in Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Limited, reported in 1985 (19) E.L.T. 22 (SC) = AIR 1985 SC 330. 50.3. In Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Limited reported in 1985 (19) E.L.T. 22 (SC) = AIR 1985 SC 330, the Honourable Supreme Court observed thus: "In Titaghur Paper Mills Co. Ltd. v. State of Orissa - AIR 1983 SC 603 A.P.Sen, E.S.Venkataramiah and R.B.Misra, JJ. held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not invoke the special jurisdiction of the High Court to issue a prerogative writ. It will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution unless there are good grounds to do otherwise. 50.7. In A. Venkatasubbiah Naidu v. S.Chellappan reported in (2000) 7 SCC 695 (vide para 22), the Honourable Supreme Court deprecated the practice of exercising the writ jurisdiction when an efficacious alternative remedy is available. 50.8. In W.P.No.981 of 2003 (Tax) (M/s.Khandelwal Soya Industries Ltd. v. State of U.P. and others) decided on 27.8.2003 a Division Bench of the Allahabad High Court dismissed a writ petition challenging the provisional assessment orders under the U.P.Trade Tax Act on the ground of alternative remedy under Section 9 of that Act. Against the aforesaid judgment, Special Leave Petition was filed before the Supreme Court which has been dismissed. 50.9. Same is the view taken by different Division Benches of this Court in W.A.No.1555 to 1557 of 2007 dated 10.12.2007; W.A.Nos.749 & 750 of 2006 dated 22.6.2006 and W.A.Nos.590 & 591 of 2008 dated 11.6.2008. In W.A.No.590 & 591 of 2008 the First Bench of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther noticed the previous decisions of the Apex Court and this Court wherein the Court adverted to the rule of self-restraint that writ petition will not be entertained if an effective remedy is available to the aggrieved person. 52. 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. 53. 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. 54. It is also settled law that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. 55. Further, in this case, the respondent claimed that there is a huge evasion of tax to the tune of several Crores of Rupees. For the tra ..... 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