Remanded

M/s Black and White Recreation Club v. State of Tamilnadu

Madras HC22 Dec 2022WP(MD)/28746/2022

Case brief

AI extract

What is this about?

The petitioner challenged a show-cause notice under the TNVAT Act. The single-judge bench held that the notice was premature and proceedings were at an initial stage. The court declined to quash the notice, directing the petitioner to submit an explanation and undergo a hearing before receipt of a final order.

What did the court decide?

Petitioner directed to submit explanation by 28.02.2023; enquiry to follow with hearing; legal remedies available against final adverse order.

M/s Black and White Recreation Club Vs State of… — Writ and Judicial Review | Madras HC (2022)

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W.P. (MD) No. 28746 of 2022

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

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DATED: 22.12.2022

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CORAM

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THE HON'BLE MR. JUSTICE P.D. AUDIKESAVALU

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W.P. (MD) No. 28746 of 2022 and W.M.P. (MD) No. 22732 of 2022

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M/s. Black and White Recreation Club, Represented by its Secretary, Mr. Murugavel, S/o. Ponnuchamy, No. 13, Karpaga Nagar, 6^th Street, K.Pudur, Madurai, Madurai District. ... Petitioner

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-vs-

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State of Tamilnadu, Rep. by the Assistant Commissioner (ST) (FAC), The Office of State Tax, Madurai Rural East Assessment Circle, Madurai.

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... Respondents

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Prayer:- Petition filed under Article 226 of the Constitution of India, for issue of Writ of Certiorari, calling for the entire record pertaining to the impugned order in proceedings in TIN No. 33226504120/2021-22 dated 25.11.2022 passed by the Respondent herein and quash the same as illegal.

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For Petitioner : Mr. P.M.Vishnuvarthanan For Respondent : Mr. Na.Ga.Nataraj, Additional Government Pleader

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https://www.mhc.tn.gov.in/judis

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O R D E R

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Heard Mr. P.M.Vishnuvarthanan, Learned Counsel for the Petitioner and Mr. Na.Ga.Nataraj, Learned Additional Government Pleader, who takes notice for the Respondent, and perused the materials placed on record, apart from the pleadings of the parties.

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The Writ Petition challenges the notice dated 25.11.2022 issued by the Respondent, which is evidently a notice calling for objections, if any, from the Petitioner for the proposal to levy tax under the Tamil Nadu Value Added Tax Act, 2007 (hereinafter referred to as 'the TNVAT Act' for short).

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It is the case of the Petitioner that in view of the doctrine of mutuality, the supply of liquor to the members of its club would not amount to a transaction of sale of goods from one person to another attracting taxation under the TNVAT Act, placing reliance on the decision of the Hon'ble Supreme Court of India in State of West Bengal -vs- Calcutta Club [(2019) 19 SCC 107], where it has been held as follows:-

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“52.1 The doctrine of mutuality continues to be applicable to

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W.P. (MD) No. 28746 of 2022

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incorporated and unincorporated members' clubs after the 46th Amendment adding Article 366(29-A) to the Constitution of India.

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52.2 CTO -vs- Young Men's Indian Assn. [(1970) 1 SCC 462] and other judgments which applied this doctrine continue to hold the field even after the 46^th Amendment.

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52.3 Sub-clause (f) of Article 366(29-A) has no application to members' clubs.”

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The consistent legal position has been reiterated by the Hon’ble Supreme Court of India in Union of India -vs- Kunisetty Satyanarayana [(2006) 12 SCC 28] that a charge memo or show cause notice cannot be challenged before the completion of enquiry and the proceedings cannot be interdicted till it reaches its logical conclusion. It would be useful here to extract the relevant passages from the said decision which read as follows:-

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“13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board -vsRamdesh Kumar Singh [JT 1995 (8) SC 331], Special Director - vs- Mohd. Ghulam Ghouse (AIR 2004 SC 1467), Ulagappa -vs-

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Divisional Commissioner, Mysore [2001(10) SCC 639[, State of U.P. -vs- Brahm Datt Sharma (AIR 1987 SC 943) etc.

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14. The reason why ordinarily a writ petition should not be

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entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

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15.

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15. Writ jurisdiction is discretionary jurisdiction and hence

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such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet.

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16. No doubt, in some very rare and exceptional cases the High

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Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter.”

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Having due regard to the aforesaid legal position, as there is nothing which precludes the Petitioner from raising the contentions in this Writ Petition in the reply to be submitted to the Respondent, who is bound to deal with the same before coming to any ultimate conclusion, there is no necessity for the Court to interfere at this pre-mature stage of the matter.

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In such circumstances, without expressing any view on the merits of the controversy involved in the matter, the Writ Petition is disposed on the following terms:-

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(i) it shall be incumbent upon the Petitioner to submit its explanation to the show cause notice, which is impugned in the Writ Petition, if not done already, to the concerned authority by 28.02.2023;

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(ii) in the event of not being satisfied with the explanation submitted by the Petitioner, an enquiry shall be conducted following the prescribed procedure after affording full opportunity of personal hearing to the Petitioner to explain its position in that regard and a reasoned order shall be passed dealing with each of the contentions raised on merits and in accordance with law and the decision taken communicated under written acknowledgment;

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(iii) if any adverse decision is taken, the Petitioner may pursue legal remedies in accordance with law;

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(iv) consequently, the connected Miscellaneous Petition is closed; and

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(v) there shall be no order as to costs.

22.12.2022

sj/vjt

Index: Yes/No

Note: Issue copy of the order by 23.01.2023

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The Assistant Commissioner (ST) (FAC), The Office of State Tax, Madurai Rural East Assessment Circle, Madurai.

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Copy to

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M/s. Black and White Recreation Club, Represented by its Secretary, Mr. Murugavel, S/o. Ponnuchamy, No. 13, Karpaga Nagar, 6^th Street, K.Pudur, Madurai, Madurai District.

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W.P. (MD) No. 28746 of 2022

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P.D. AUDIKESAVALU, J.

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sj/vjt

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W.P. (MD) No. 28746 of 2022

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22.12.2022