Allowed

M/S.Supreme Trading House v. the Assistant Commissioner (St)

Madras HC7 Oct 2021WA/2612/2021

Case brief

AI extract

What is this about?

The High Court allowed writ appeals challenging tax assessment orders for six years. The Court set aside the dismissal of earlier petitions and remanded the matter for one more opportunity to reconcile purchase slips with ledger records, ensuring verification of entries before completing the assessment.

What did the court decide?

Impugned order set aside; matter remanded for fresh consideration; one more opportunity granted to reconcile slips with ledger; personal hearing fixed for second week of November, 2021.

M/S.Supreme Trading House Vs the Assistant… — Service and Employment | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 07.10.2021

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CORAM :

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THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM

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AND

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THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP

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W.A.NOS.2612 TO 2617 OF 2021
AND
C.M.P.NOS.17107 TO 17112 OF 2021

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M/s.Supreme Trading House,
Represented by its Proprietor,
A.IbrahimKaleel
No.86, Kariya Gounder Street,
Khaderpet,
Tirupur – 641 601. ...Appellant in all appeals

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Vs.

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1.The Assistant Commissioner (ST)
 Central-II Assessment Circle,
 Tiruppur – 2.

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2.The Commercial Tax Officer,
 (Enforcement) Group I,
 Coimbatore. ...Respondents in all appeals

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Common Prayer : Writ Appeals in W.A.Nos.2612 to 2617 of 2021
filed under Clause 15 of the Letters Patent to set aside the
order, dated 13.07.2021, passed in W.P.Nos.15687, 15680, 15688,
15682, 15693 & 15684 of 2020 respectively.

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Prayer in WP Nos.15687, 15680, 15688, 15682, 15693 and 15684 of
2020 : Writ petitions filed under Article 226 of the
Constitution of India praying for the issuance of Writ of
Certiorarified Mandamus to call for the impugned proceedings of
the first respondent in TIN / 33262463506 / 2010-2011, 2011-
2012, 2012-2013, 2013-2014, 2014-2015 and 2015-2016 and quash
the impugned orders dated 18.03.2020 as passed in Violation of

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https://hcservices.ecourts.gov.in/hcservices/

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principles of natural justice and to further direct the first
respondent to pass a fresh assessment order after considering
the objections dated 21.02.2020 filed by the petitioner by
granting reasonable opportunity to the petitioner.

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For Appellant : Mr.P.Rajkumar
in all the appeals

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For Respondents :Mr.M.Venkateswaran
Government Counsel
in all appeals

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(Judgment was delivered by T.S. SIVAGNANAM, J.)

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These Writ Appeals are directed against the common order,
dated 13.07.2021, in W.P.Nos.15687, 15680, 15688, 15682, 15693 &
15684 of 2020.

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2.The writ petitions were filed by the appellant
challenging the Assessment Order under the provisions of the
Tamil Nadu Value Added Tax Act, 2006 (“the Act” for brevity) for
the Assessment Years 2011-12 to 2015-16. The writ petitions were
dismissed on the ground that the petitioner have been dragging on
the matter and the petitioner was unable to do the reconciliation
and to reconcile the errors pointed out by the Department. We
are to test the correctness of the said observation in these
appeals.

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3.We have elaborately heard Mr.P.Rajkumar, learned
counsel for the appellant and Mr.M.Venkateswaran, learned
Government Counsel, appearing for the respondents.

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4.The assessment for the subject Assessment Years were
completed by order dated 30.12.2016, which was a revision of
assessment, pursuant to an inspection conducted in the place of
business of the appellant on 08.10.2015. The allegations against
the appellant is suppression of turnover. The appellant was
issued notice dated 07.12.2016, and stating that no reply or
objections were filed till 30.12.2016, the proposal was confirmed
and the reassessment was completed. This was put to challenge in
W.P.Nos.3951 to 3956 of 2017. The Court found that there has

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https://hcservices.ecourts.gov.in/hcservices/

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been violation of principles of natural justice, inasmuch as show
cause notice was not received on time and accordingly, the writ
petitions were disposed of by order dated 17.02.2017, by issuing
the following directions :

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“8.Accordingly, the writ petitions are
disposed of by directing the petitioner to treat the
impugned orders as show cause notices and if the
petitioner seeks copies of the documents or records,
the first respondent shall provide copies of the same
wherever it is permissible and viable. On receipt of
the copies of documents, the petitioner is directed to
submit their objections within a period of ten days
therefrom and after receipt of the objections, the
first respondent shall afford an opportunity of
personal hearing and redo the assessments in
accordance with law within 15 days thereafter. Till
fresh orders of assessment are passed, no coercive
action shall be initiated by the first respondent to
recover tax as computed in the assessment orders. No
costs. Consequently, the above WMPs are closed.”

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In terms of the above directions, if the appellant had sought
for copies of documents or records which were taken away during
the inspection, the same have to be provided whereever
permissible and viable.

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5.Pursuant to the said order, the respondent officer had
issued notice, dated 16.07.2019, directing the appellant to come
over to the office of the respondent on 26.07.2019/30.07.2019,
etc. The appellant had appeared pursuant to the notice and the
representation of the appellant, dated 03.12.2019, states that
they have received the account books records, along with the
instructions and they have noted the contents and requested for
30 days' time to submit their reply. The respondent had
permitted 15 days' time and stated that no further delay is
permitted, which has been noted in the representation dated
03.12.2019. On 17.12.2019, the appellant had submitted a
representation stating that, though they sought 30 days, they
have been granted only 15 days' time and it is not sufficient to
file objections, as the assessment relates to six years and the
recovery slips are voluminous and verification of the slips with
the Books of Accounts is a cumbersome process and therefore,
they requested time till 2nd week of January, 2020. This
representation was given in the office of the respondent and

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https://hcservices.ecourts.gov.in/hcservices/

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received in the office on 17.12.2019, as per the endorsement in
the Letter Delivery Book.

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6.Thereafter, personal hearing notice, dated 14.01.2020,
was issued, informing the appellant that copies of D7 records
were given to the appellant on 20.11.2019 and the appellant was
requestedtoappearforpersonalhearingon
24.01.2020/28.01.2020. By representation dated 20.01.2020, the
appellant had submitted that they are required to appear before
this Court in a Customs matter and requested to provide
opportunity of personal hearing on 29.01.2020 or 30.01.2020.
Further, the officer fixed the personal hearing on 28.01.2020.
Subsequently, another representation dated 28.01.2020 was given,
requesting for time. In the representation dated 21.02.2020,
the appellant had pointed out as follows :

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“The real fact in this case is that the
entries in the slips relate only to the purchase of
hosiery cloth, which was exempted by then. The
quantity of hosiery cloth is weighed and referred in
kilograms only and the variety is referred in counts
like 20s, 40s, etc., as in the case of yarn. The
quantity of inward cloth purchased from various cloth
suppliers were recorded in the inward registers
maintained by us was recovered by the Enforcement Wing
Officers, by issuing D-7 receipt.

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The process of converting yarn into cloth is
very simple and it is called as knitting which is
other form of weaving. Like in weaving process, no
more material is added to the yarn knitted. In the
process of weaving, the lengthy warp yarn is loomed
through weft yarn in a crisscross manner. Whereas in
knitting, vertical yarn is spirally knitted (like
sweater knitting) in a knitting machine to produce
tubular form of cloth like a hose pipe and that is why
it is called a hosiery cloth. (hose-iery meaning hose
like).

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Therefore, if a bag of 40s yarn containing 50
kg is knitted into cloth, then the final output will
be 50kgs of 40s knitted hosiery cloth. There is no
variation in the quantity after the knitting process
is over. As such, in order to identity the cloth

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https://hcservices.ecourts.gov.in/hcservices/

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purchased from other suppliers, in the inward
registers, the quantity is mentioned in terms of
number of bags and in terms of kgs. In consequence,
the Enforcement wing Officers, mistook the units as
referring to purchase of yarn and verified in our
Balance Sheet the purchase of yarn and found that only
very few purchases were available and proceed to
propose assessment.

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This proposal of assessment treating the
purchase of cloth as purchase of yarn is not fair,
legal or logical. Further, the Enforcement Wing
Officers have not at all processed the slips by making
deep scrutiny of slips and not at all verified the
entries made in the slips with reference to our books
of accounts. Had it been done, the Enforcement Wing
officers would have found out that the actual
purchases were only exempted commodity of hosiery
cloth and the entries thereto in the slips refer and
relate only to the purchase of Cloth.

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Hence, when there was no proper scrutiny and
verification of slips carried out by. the Enforcement
Wing Officer, the assessment, if made, based on the
Enforcement proposal would amount to denial of natural
justice.

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Therefore, we request to process the slips by
verifying each and every entries in the slips with
reference to our books of accounts to find out whether
entries contained in the slips are duly reflected in
the books of accounts. It is most incumbent to do so
before arriving at any conclusion on this issue. We
will be pleased to produce the books of accounts and
all the relevant documents in this regard on hearing
from you.”

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The said representation has been received by the office of the
respondent on 21.02.2020, as could be seen from the endorsement.
Thereafter, the assessment has been completed by order dated
18.03.2020, which were impugned in the writ petitions.

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7.It is no doubt true that the respondent had granted
reasonable time to the appellant and the appellant had sought

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https://hcservices.ecourts.gov.in/hcservices/

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for adjournment on more than three occasions. But their
contention is that the reconciliation would take certain time
and they are required to explain to the Assessing Officer by
comparing the slips along with the ledger. This according to
them is a very cumbersome process, more particularly, when the
assessment is for six years. When the writ petitions were
entertained, it appears that the respondent was directed by the
Court not to initiate any coercive action, not in written
orders, but by making certain oral observations. Thus, the
assessments have been kept pending since October, 2020. The
writ petitions have now been dismissed by the impugned order.
We also find that no liberty had been granted to the petitioner
to file an appeal.

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8.In our view, if the appellant has not made out a case
for interference in a writ petition, it would be appropriate to
leave it open to the appellant to avail the alternate remedy
under the Act rather than foreclosing the issue. In any event,
we are of the view that, one more opportunity can be granted to
the appellant and nothing more. If the appellant is able to
reconcile the slips with the ledger, then the Assessing Officer
may take note of it and complete the assessment. Only for such
reason, we are inclined to grant one more opportunity to the
appellant, especially when in the Assessment Order, for the
first time, the Assessing Officer has referred to D7 records,
which are from Sl.Nos.1 to 15 and contained in the Books marked
A to O. Therefore, to that extent at least, the appellant
should be permitted to reconcile the slips with the ledger.

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9.For the above reasons, these Writ Appeals are allowed
and the order passed in the writ petitions is set aside and
consequently, the matter stands remanded to the respondent for
fresh consideration. The respondent shall fix the date for
personal hearing during the second week of November, 2021 and on
the date fixed, the appellant shall appear and no adjournment
shall be granted. The appellant shall produce the necessary
slips and records and give the required particulars in respect
of D7 records as mentioned in the Assessment Order and the said
particulars be verified by the respondent and the assessment be
completed. If the appellant refuses to cooperate with the
assessment proceedings, the benefit of this order will not enure
to the appellant and the Writ Appeals will be dismissed
automatically without reference to this Court, thereby, reviving

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https://hcservices.ecourts.gov.in/hcservices/

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the order passed in the writ petitions. No costs.
Consequently, connected Miscellaneous Petitions are closed.

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Sd/-

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Assistant Registrar (CS-III)

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// True Copy //

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Sub Assistant Registrar

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mkn

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To

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1.The Assistant Commissioner (ST) Central-II Assessment Circle, Tiruppur – 2.

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2.The Commercial Tax Officer, (Enforcement) Group I, Coimbatore.

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+1cc to Mr.P.Rajkumar, Advocate SR.No.53030

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W.A.Nos.2612 to 2617 of 2021

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PPA(CO)
RVM(10/11/2021)

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https://hcservices.ecourts.gov.in/hcservices/

M/S.Supreme Trading House v. the Assistant Commissioner (St)

Case brief

What is this about?

What did the court decide?

M/S.Supreme Trading House v. the Assistant Commissioner (St)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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