Shewil Trading Company Vs Commissioner of Commercial Taxes (Madras High Court)
Introduction: The recent verdict by the Madras High Court in the case of M/s. Shewil Trading Company v. The Commissioner of Commercial Taxes & Ors. [W.P. No. 26493 of 2022 dated November 02, 2023] has significant implications for TNVAT recovery proceedings. The court directed a pause on all revenue recovery actions until the Cyber Crime Cell concludes its investigation into the alleged misuse of Shewil Trading Company’s login ID. Let’s delve into the details of the case, the court’s directive, and its impact on recovery proceedings.
Madras High Court directed the Cyber Crime Cell Inspector to complete the investigation within eighteen (18) months from receipt of a copy of the order. Till such investigation is completed, all revenue recovery proceedings against the Petitioner shall be kept in abeyance. In case, the complaint of the Petitioner turns out to be untrue or was intended to facilitate fraud being committed using the login ID of the Petitioner, the assets of the Petitioner shall be brought to sale and the writ petition stands disposed.
Facts:
M/s. Shewil Trading Company (“the Petitioner”) was a dealer engaged in the business of curtains and Form mattresses and Pillows. The Petitioner filed regular returns electronically until December 2013 under the provisions of Tamil Nadu Value Added Tax Rules, 2007 (“the TNVAT Rules”). Thereafter, from January 2014, the Petitioner experienced a problem. The Petitioner could not log in and file the return in the portal as the Petitioner’s attempt to log in was declined on the screen as an ‘invalid login account’. Thus, the manual return was filed, and the issue was escalated to the Assistant Commissioner (CT) multiple times.
The Petition also filed a complaint before the Cyber Crime Cell, on August 31, 2015, which culminated in an FIR dated April 06, 2017, in Crime No. 100 of 2017. The Petitioner reiterated the alleged misuse of the Petitioner’s login ID and Password. Consequently, a huge transaction was made by a person using the Petitioner’s TIN number. Thereafter, the Order dated July 29, 2022, was issued to the Petitioner seeking recovery of Rs.11,63,24,233/- for the Assessment Year 2014-2015 and 2015-2016 (“the Impugned Order”). Hence, the Petitioner filed a Writ Petition under Article 226 of the Constitution of India.
Issue:
Whether evaded tax amount be recovered without proper investigation?
Held:
The Hon’ble Madras High Court in the case of W.P.No.26493 of 2022 held under:
