Case Law Details
Tvl. K. P. Trading Corporation Vs Assistant Commissioner (ST) (Madras High Court)
Madras High Court has set aside an assessment order issued against Tvl. K. P. Trading Corporation due to procedural lapses. The petitioner contended that the tax authorities failed to determine the tax liability properly and disregarded a prior circular from the Commissioner of State Tax, which mandated a reasoned order. The petitioner further argued that, despite submitting a reply, the order unjustly treated it as non-compliant without adequate justification. The court noted that the assessment order was cryptic and did not adhere to the principles of natural justice. The Additional Government Pleader, representing the tax authorities, suggested that the petitioner should pursue an appeal, but the court found this argument insufficient since the order itself lacked legal validity.
In its ruling, the court emphasized the necessity of a fair hearing and adherence to procedural guidelines. It annulled the assessment order and directed the tax department to reassess the case by allowing the petitioner an opportunity to present their case adequately. Furthermore, the court advised the Commissioner of State Tax to amend the circular by holding assessing officers accountable for issuing deficient orders. It recommended disciplinary action against officers who fail to follow statutory provisions and issue unreasoned decisions. The ruling reinforces the importance of procedural fairness in tax assessments and the obligation of tax authorities to issue clear and justified orders.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The challenge in this writ petition is to an order of assessment on the ground that the respondent had neither determined the tax as provided under law nor has followed the circular issued by the Commissioner of State Tax in respect of the procedure to pass the assessment order.
2. The learned counsel for the petitioner would submit that the respondent had noted as if the petitioner had not filed a reply. He would submit that the petitioner had filed a reply and the respondent himself had scanned the reply filed by the petitioner and added it to the order passed by him, however, had held that the reply filed by the petitioner was not found in order and had not furnished any conclusive evidence. The said order according to him is a cryptic order in violation of provisions of law as also the circular, which had explained the provisions of law requiring the respondent to pass a speaking order. Hence, he seeks interference with the order impugned in this writ petition.
3. Countering his arguments, Mr.R.Suresh Kumar, learned Additional Government Pleader appearing for the respondent would submit that these issues can be raised before the appellate authority, which is an efficacious alternative remedy that is available to the petitioner and therefore, the writ petitioner may be relegated to file an appeal against the order passed by the respondent.
4. I have considered the rival submissions made by the learned counsel on either side.
5. As rightly pointed out by the learned counsel for the petitioner, the order impugned herein is cryptic. It is incumbent upon the respondent that too when a reply is filed to determine the tax that is payable by the petitioner. Further, the Commissioner of State Tax in a circular dated 29.08.2024 had clearly issued advisory to follow the principles of natural justice and pass a speaking/reasoned order. The reason for passing a speaking order/reasoned decision has also been clearly captured in the circular passed by the Commissioner of State Tax. However, the order had been passed both in violations of provisions of law, which requires a determination of tax and also the circular issued by the Commissioner of State Tax. In such event, the impugned order is unable to be sustained and deserves to be set aside.
6. In fine, the Writ Petition stands allowed and the impugned order passed by the respondent in GSTIN 33AARFK7189B1Z2/2019-20 dated 08.08.2024 is set aside. However, the respondent is directed to re-do the exercise by affording an opportunity of hearing effectively to the petitioner and pass orders on merits and in accordance with law.
7. Before parting with the case, I deem it necessary that the circular dated 29.08.2024 issued by the Commissioner of State Tax requires an addition, wherein the Commissioner of State Tax shall hold the Assigning Officer liable for passing a cryptic order without determination of tax and also passing orders in violation of the said circular. Hence, there shall be a direction to the Commissioner of State Tax to issue a further circular that if any of the Assessing Officer in future passes an order in violation of the provisions of law by not determining the tax payable by the assessee and who do not pass a speaking order would be clamped with the disciplinary proceeding as the Assigning Officer is not only bound by the statute, but also the circular issued by the Commissioner of State Tax. However, there shall be no order as to costs. Consequently, connected Miscellaneous Petition is closed.
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