Judgment:
(Prayer: W.P.No.24779 of 2015 filed under Article 227 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records on the files of the first respondent in TNGST No.3200209/97-98 dated 25.05.2015 and quash the same as being contrary to the direction issued by this Court in W.P.Nos.2946 and 2947 of 2008 dated 05.02.2008 and that of the direction issued by the second respondent in A.P.No.41/2007 dated 12.06.2007.)
(Prayer: W.P.No.24780 of 2015 filed under Article 227 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records on the files of the first respondent in TNGST No.3200209/98-99 dated 25.05.2015 and quash the same as being contrary to the direction issued by this Court in W.P.Nos.2946 and 2947 of 2008 dated 05.02.2008 and that of the direction issued by the second respondent in A.P.No.62/2007 dated 12.06.2007.)
(Prayer: W.P.No.24115 of 2015 filed under Article 227 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records on the files of the first respondent in TNGST No.3200130/97-98 dated 25.05.2015 and quash the same as being contrary to the direction issued by this Court in W.P.Nos.3133 and 3134 of 2008 dated 06.02.2008 and that of the direction issued by the second respondent in A.P.No.42/2007 dated 08.06.2007.)
(Prayer: W.P.No.24116 of 2015 filed under Article 227 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records on the files of the first respondent in TNGST No.3200130/98-99 dated 25.05.2015 and quash the same as being contrary to the direction issued by this Court in W.P.Nos.3133 and 3134 of 2008 dated 06.02.2008 and that of the direction issued by the second respondent in A.P.No.76/2007 dated 12.06.2007.)
1. These writ petitions have been filed against the fresh assessment orders passed by the first respondent, for the assessment years 1997-1998 and 1998-1999 after the matter was remanded by this Court by the orders dated 05.02.2008 and 06.02.2008.
2. The facts arising out of the writ petition in W.P.No.24879 of 2015, are as under:
2.1. The petitioner is a partnership concern and is a dealer in edible oils. The petitioner has been registered as an assessee under the TNGST Act and reported a total and taxable turnover of Rs.2,48,48,538/- and Rs.Nil respectively, in their Annual A1 Return filed for the assessment year 1997-1998 under the TNGST Act and claimed exemption on the entire turnover. The petitioner has claimed exemption as second purchase of groundnut kernel for Rs.90,98,160/- from Tvl.Mohammed Rafi, Salem, Suramangalam Circle; claimed exemption as second sales of groundnut oil for Rs.76,35,810/- purchased from the registered dealer, viz. Tvl.Mohammed Rafi, Salem, Suramangalam Circle; claimed exemption as second sales of palmolein oil for Rs.50,88,952/-. After considering the facts and circumstances of the case, the Assessing Officer determined the total and taxable turnover at Rs.2,48,48,535/- and Rs.1,97,59,583/- respectively, on the ground that the selling dealer A.Mohamed Rafi, Salem, has not reported his taxable turnover to the Department. The petitioner filed an appeal against the said order dated 21.03.2003 to the second respondent, who is the statutory Appellate Authority under Section 31 of the TNGST Act. The said appeal was numbered as A.P.No.41 of 2007 and an order was passed on 12.06.2007 setting aside the order of assessment dated 21.03.2003 with a direction to re-do the assessment, after complying with certain directions.
2.2. Even after the said order passed by the second respondent, the first respondent had again issued notice dated 31.12.2007 proposing to assess the same second sales turnover without carrying out any of the directions issued by the second respondent. Hence, the petitioner submitted a letter dated 18.01.2008 to the first respondent to furnish a copy of Enquiry Report about the enquiry made with respect to A.Mohamed Rafi, Salem, the seller to the petitioner. The petitioner also sought for the details of investigation, as to the genuineness of the sale bills issued by the seller, as directed by the Appellate Authority, the second respondent herein.
2.3. It is claimed by the petitioner that unless those requested details are furnished, the petitioner would not have an opportunity to defend his stand in the assessment proceedings. The petitioner also filed writ petitions in W.P.Nos.2946 and 2947 of 2008 questioning the validity of the notice dated 31.12.2007 on the ground that the said notice was not in inconformity with the principle laid down by this Court in the judgment reported in (2007) 8 VST 131 (Mds) (Ragham Polymers Vs.Commercial Tax Officer, Ice House Assessment Circle, Chennai-28) and in those writ petitions, the petitioner further prayed for a direction to the first respondent to pass orders afresh as directed by the second respondent in his order in A.P.No.41/2007 dated 12.06.2007.
2.4. This Court, on 05.02.2008, disposed of the writ petitions directing the first respondent to pass orders on merits and in accordance with law after complying with the directions of the appellate authority in the orders dated 08.06.2007 and 12.06.2007 in A.P.Nos.42 and 76 of 2007. In pursuance of the direction issued by this Court, the petitioner on 20.03.2008 filed a letter furnishing the particulars so as to enable the first respondent to pass orders in accordance with law.
2.5. The petitioner further claimed that he had enclosed his bank details, statements and ledger accounts along with the said letter dated 20.03.2008 to the first respondent for his effective consideration in the assessment proceedings, as directed by the second respondent. While the matter stood thus, after a lapse of four years, without complying with the directions issued, another notice dated 28.01.2011 was issued by the first respondent seeking certain particulars from the petitioner so as to decide the eligibility of second sale exemption for the assessment year 1997-98. In pursuance of the notice dated 28.01.2011, the petitioner had given a detailed reply along with all the particulars as required by the first respondent.
2.6. While so, after a lapse of nearly five years from the date of receipt of reply, the present impugned order dated 25.05.2015 has been passed straight away without taking note of the petitioner's reply dated 15.02.2011 and without even following the direction issued by this Court as well as the direction issued by the second respondent on two different occasions.
2.7. It is further submitted by the petitioner that the first respondent has passed the order in TNGST.No.3200130/99-2000 dated 30.08.2001 allowing second sale exemption from tax on the purchases of groundnut and groundnut kernel effected from Thiru A.Mohamed Rafi, Salem, as claimed by the petitioner in respect of the assessment year 1999-2000, after thorough verification of the fact that the selling dealer was very much available with existing registration number. While so, it is not known to the petitioner as to why the present impugned order has been passed disallowing the second sale exemption in respect of the purchases from the same seller Thiru A.Mohamed Rafi, Salem, for the assessment years 1997-98 and 1998-99.
2.8. It is further claimed by the petitioner that the point of levy cannot be shifted in view of the principle laid down by the Honourable Supreme Court of India in the judgment reported in (1999) 114 STC Page No.1 (Shanmuga Traders Vs.State of Tamil Nadu). Further, this Court was pleased to allow the plea of a similarly placed assessee in the judgment reported in (2010) 28 VST 228 (Mad)(State of Tamil Nadu Vs. Sri Alaggar Traders).
2.9. In the light of the above principle laid down by this Court in the said judgment, according to the petitioner, the impugned order is also liable to be set aside, as it is contrary to the principle laid down by the Hon'ble Supreme Court of India in the decision reported in (1999) 114 STC 1 (Shanmuga Traders Vs.State of Tamil Nadu) and that of the decision rendered by this Court in the judgment reported in (2010) 28 VST 228 (Mad) (State of Tamil Nadu Vs. Sri Alaggar Traders). He further stated that the first respondent has not applied his mind while framing the assessment, as the reasons given in the impugned order are exactly similar to that of the reasons given in his original order dated 21.03.2003, which order was only set aside by the second respondent by his order in A.P.No.41/2007 dated 12.06.2007. Inviting the attention of this Court to the Circular issued by the Special Commissioner and Commissioner of Commercial Taxes in Acts.Cell-VI/ 13234/2001 dated 20.04.2001 on the basis of the guidelines issued by the Hon'ble Mr.Justice Ramanujam Committee, it is submitted that the assessing officers were advised that once a pre-assessment notice is issued, there is no time limit to pass orders, but there should not be any undue delay. But in the present case, the impugned order has been passed after a very long delay, without even giving any opportunity to the petitioner.
2.10. Stating so, the petitioner has filed the writ petition in W.P.No.24879 of 2015. Similar is the facts and circumstances in the other writ petitions.
3. The first two writ petitions, ie. W.P.Nos.24879 and 24880 of 2015, relates to the assessments made with regard to M/s.M.P.K.Venkatesan and Co., for the assessment years 1997-98 and 1998-99, respectively. The other two writ petitions, ie. W.P.Nos.24115 and 24116 of 2015, relates to the assessments made with regard to M/s.M.P. Karuppanna Chettiar and Sons, for the assessment years 1997-98 and 1998-99 respectively.
4. The learned Counsel for the assessees submitted that the impugned orders are liable to be quashed as they are contrary to the principles laid down by the Hon'ble Supreme Court in its judgment reported in (1999) 114 STC Page No.1 (Shanmuga Traders Vs.State of Tamil Nadu),as well as the principles laid down by this Court in its judgments reported in (2010) 28 VST 228 (Mad)(State of Tamil Nadu Vs. Sri Alaggar Traders)and in (2007) 8 VST 131 (Mds) (Ragham Polymers Vs.Commercial Tax Officer, Ice House Assessment Circle, Chennai-28). Further, the learned Counsel for the assessees has submitted that the impugned orders are contrary to the specific directions issued by this Court. Further, the learned Counsel for the assessees has submitted that the assessing authority is bound to strictly follow the directions of the appellate authority in making a fresh order and that the assessing authority has no independent jurisdiction to decide the issue at his whims and fancies. Hence, he prayed for setting aside the orders impugned. On the other hand, the learned Additional Government Pleader supported the orders of the respondent.
5. Heard the learned Counsel for the assessees as well as the learned Additional Government Pleader appearing for the Revenue, on the submissions made by the learned Counsel for the parties and perused the materials available on record, carefully and meticulously.
6. On a deep scanning of the relevant materials, this Court finds that the following are the crux of the factual matrix to analyse the issue and they are:
6.1. The petitioners are engaged in the business of selling groundnut kernel and groundnut oil and they have reported the total and taxable turnover for the assessment years 1997-1998 and 1998-1999.
6.2. They also claimed exemption of certain goods as second sales.
6.3. By the assessment orders dated 21.3.2003 and 13.5.2003, the petitioners were assessed, disallowing the claim of exemption and determining the tax liability and penalty, on the ground that their selling dealer was a non-existent dealer and was a bill trader and for want of documentary evidence.
6.4. Challenge was made to the same by filing appeals before the second respondent in AP.Nos.42, 76, 41 and 62 of 2007, which were disposed of by the orders dated 8.6.2007 and 12.6.2007, setting aside the said assessment orders, with a direction to re-do the assessment afresh, with specific directions.
6.5. Thereafter, the first respondent again issued the notices dated 31.12.2007, proposing to levy tax and penalty, to which, the petitioners submitted the representations, dated 18.01.2008, requesting the first respondent to furnish a copy of the enquiry report and the details of the investigation report.
6.6. Then, the petitioners filed Writ Petitions in WP.Nos.3133, 3134, 2946 and 2947 of 2008, challenging the said notices dated 31.12.2007 and the said Writ Petitions were disposed of by this Court by the orders dated 6.2.2008 and 5.2.2008, directing the first respondent to redo the assessment afresh, as directed by the second respondent in the appeals, by the orders dated 8.6.2007 and 12.6.2007.
6.7. Thereafter, the petitioner filed representations dated 20.3.2008 to the first respondent, requesting to furnish certain particulars.
6.8. While so, after lapse of nearly four years, another notice dated 28.1.2011, calling upon the petitioners to furnish certain particulars, had been issued, to which the petitioner had given a reply dated 15.2.2011.
6.9. Thereafter, after lapse of nearly five years, the impugned orders dated 25.5.2015 have been passed, confirming the original assessment of tax and penalty on the same grounds. Hence, these Writ Petitions have been filed.
7. The vehement contention of the learned Counsel for the petitioners is that since the goods dealt with by the petitioners being declared goods, the question of levy does not arise at all and that the impugned orders of assessment are liable to be quashed, as being contrary to the specific directions of this Court as well as the second respondent and contrary to the principles laid down in the decisions of the Honourable Supreme Court reported in 1999-114-STC-1 (Shanmuga Traders Vs. State of Tamil Nadu), 28 VST 228 Mad (State of Tamil Nadu Vs. Sri Alaggar Traders) and 2007 8 VST 131 (mds) (Ragham Polymers Vs. Commercial Tax Officer) and he prayed for quashing the impugned orders.
8. However, it is strenuously argued by the learned Additional Government Pleader appearing for the respondents submitted that on the basis of the available records and details produced by the petitioners, the impugned orders had been made on the grounds that the seller is a bill trader and has not done any business at the place of business and not reported the total and taxable turnover within the prescribed time. It is further submitted that in the absence of documentary evidence, the claim of the petitioners had rightly been rejected.
9. Now, the point that arises for consideration, is whether the impugned orders are sustainable in law or not?
10. A cursory view of the facts narrated supra, would make it apparently clear that during the course of business, the petitioners, while reporting the total and taxable turnover for the assessment years 1997-1998 and 1998-1999, claimed exemption of certain goods and that was rejected by the respondents on the ground that their selling dealer was a non-existent dealer and was a bill trader and for want of documentary evidence. The said rejection was also put to challenge by way of appeals before the second respondent in AP.Nos.42, 76, 41 and 62 of 2007, wherein, a direction was issued to re-do the assessment afresh, with specific directions.
11. In such an event, the first respondent once again issued the notices dated 31.12.2007, proposing to levy tax and penalty and the petitioners also submitted their representations, dated 18.1.2008, requesting the first respondent to furnish a copy of the enquiry report and the details of the investigation report. Meanwhile, writ petitions were also filed challenging the said notices and the first respondent was directed to re-do the assessment afresh, as directed by the second respondent in the appeals, by the orders dated 8.6.2007 and 12.6.2007.
12. Despite the representations made by the petitioners seeking to furnish certain particulars, another notice dated 28.1.2011, was issued calling upon the petitioners to furnish certain particulars, and that too, after lapse of nearly four years. Even then, the same was also replied on 15.2.2011.
13. Now, the main grievance of the petitioners is that after a long lapse of five years, the present impugned orders dated 25.5.2015 have been passed, confirming the original assessment of tax and penalty on the very same grounds and according to the petitioners, it is nothing but non-application of mind on the part of the respondents.
14. At this juncture, this Court feels it apposite to point out hereunder certain aspects, which warrant deep consideration on the sustainability of the impugned orders:
14.1. The first assessment made by the Assessing Officer was put to challenge in the appeal filed by the petitioners in A.P.No.41 of 2007 and an order came to be passed on 12.06.2007 whereby, the order of assessment dated 21.03.2003 was set aside, however, with a direction to re-do the assessment afresh, after complying with certain directions.
14.2. However, it is the main grievance of the petitioner that the order passed in the above appeal was not at all adhered to by the Assessing Officer during the fresh assessment. It, therefore, amounts to 'non-application of mind' to the orders of the Appellate Authority on the part of the Assessing Officer and that too, even on remand.
14.3. No doubt, this Court has also scrutinised the materials available on record, to consider the claim of the petitioner regarding the non-compliance of certain directions issued by the Appellate Authority on remand and found that there is some force on the contention of the petitioners.
14.4. Subsequently, the first respondent had again issued notice dated 31.12.2007 proposing to assess the same turnover without carrying out any of the directions issued by the second respondent. Therefore, the petitioner requested the first respondent to furnish copies of certain documents, besides, the details of investigation, as to the genuineness of the sale bills issued by the seller, as directed by the Appellate Authority, the second respondent herein.
14.5. But, it is contended by the petitioners that they have never been issued with such materials in order to defend their case effectively, despite remand.
14.6. This Court is also unable to find out any averment on the side of the respondents to deny the allegation of refusal to furnish the details sought for by the petitioners. Thus, this Court has no hesitation to hold that there is a violation of principles of natural justice in the case of the petitioners.
14.7. Moreover, they filed writ petitions in W.P.Nos.2946 and 2947 of 2008 questioning the validity of the notice dated 31.12.2007 on the ground that the said notice was not in inconformity with the principle laid down by this Court in the judgment reported in (2007) 8 VST 131 (Mds) (Ragham Polymers Vs.Commercial Tax Officer, Ice House Assessment Circle, Chennai-28) and this Court, on 05.02.2008, directed the first respondent to pass orders on merits and in accordance with law after complying with the directions of the appellate authority in the orders dated 08.06.2007 and 12.06.2007 in A.P.Nos.42 and 76 of 2007. However, after a long lapse of five years from the date of receipt of reply, the present impugned orders have been passed.
14.8. Therefore, this Court is of the view that the first respondent has passed the impugned orders without following the directions issued by this Court as well as the direction issued by the second respondent on two different occasions and at the same time, the first respondent did not even consider the petitioners' reply.
14.9. For all the above reasons, the impugned orders are liable to be set aside.
15. Here, the 'delay' on the part of the Assessing Officer has played a vital role in either way. No doubt, dispensing justice has two parts, viz., one is the process of decision making and the other is implementation. To say, it is not enough if an order is passed, but the very spirit lies in implementing it.
16. Most of the cases arise as a result of failure on the part of the Government servants to discharge their statutory or constitutional duty in time. At times, the loss caused to the Government is huge, because of the inaction on the part of the assessing authority, rather than by the action of the assessee.
17. In cases of this nature, timely action would not only generate revenue to the Government but would also thwart the defence of limitation by the assessee and therefore, the assessees cannot escape the clutches of law. When it could be arrived at a conclusion that the loss caused to the Government is only due to the delay in implementation without any valid reason or cause, then, the entire liability/responsibility should be fixed on the erring officials of the Department and then only, there must be an awareness among them about their duties and responsibilities.
18. It is shockingly true that the real peril to justice is nothing but non-implementation of an order in its true letter and spirit. The consequences of imperious behaviour to discard the orders of the Courts and the law are farfletched one and is in the nature of questioning the Power of Judicial review or in other words, the supremacy of the judiciary enshrined under Article 13 of the Constitution of India.
19. Similarly, misconduct flows from commissions as well as omissions and it reflects one's deliberate intention. Needless to say that the interest of the public is to be protected by the Government as the Government is the guardian of the State and likewise, the interest of Government is, only by the Government servants and none else. Every penny of the Exchequer is public money and therefore, any loss to the Exchequer by inaction of the Government servants, deserves stringer action against the erring officials. As the old saying goes, 'delay defeats justice' to mean, delayed justice is a defeated one. In particular, this Court opines that the delay in implementation of the orders of the Courts, does not just defeat justice, but it kills. Rule of law can prevail only upon implementation of the orders and not merely on delivery alone.
20. This Court, considering the facts and circumstances of the case and also taking into account the attitude on the part of the respondents, is constrained to hold that the delay in considering the claim of the petitioners, played a pivotal role in the case on hand and thus, the orders impugned herein, have no legs to stand and therefore, they are liable to be interfered with on this ground too.
21. In the result, the impugned orders are set aside and the matters are remanded to the authorities for consideration afresh and the respondents are directed to consider each and every aspect on the basis of the materials available and pass appropriate orders upon considering their reply and after affording due opportunity of hearing to the petitioners, so as to avoid the allegations of violation of principles of natural justice, within a period of eight weeks from the date of receipt of a copy of this order.
22. While disposing of all the writ petitions as above, the following directions/guidelines are issued for strict adherence/compliance by the authorities concerned:
(i) The Commissioner of Commercial Taxes should circulate this order to all the Assessing authorities and issue appropriate Circular to that effect, which is to be scrupulously followed by them.
(ii) After an assessment is made in accordance with the statute, the assessing officer should only wait until the appeal period. If there is no communication from the assesse either regarding a stay order from the appellate authority or the High Court, recovery proceedings must be initiated immediately.
(iii) As practice, though the assessment orders are communicated to the territorial joint commissioners, necessary actions are not taken by them to enquire about the recovery even after the expiry of the statutory appeal period. A mere issuance of notice for recovery is insufficient. It is the duty of the assessing officer to ensure that the tax due is collected.
(iv) In case of attachment by freezing the bank accounts or recovery from the bank account, a copy of the order of attachment or recovery is to be sent to the assesse.
(v) Once, directions are issued by the High Court or appellate authority, the same must be strictly followed and implemented within the time frame fixed by the court.
(vi) In case of contempt petitions, it is a personal cause of action against an erring officer. Therefore, the Department must ensure that the expenses of professional charges paid to the Counsel appearing on behalf of the contemnor/erring official is met by him and not by the Government.
(vii) In case of any loss to the Department on account of the omission of the assessing officer, the loss must be recovered from the delinquent officer.
(viii) The territorial Joint Commissioners must only follow up the action taken. They must not influence the decision of the assessing officers giving room for further litigation.
(ix) The Legal wing of the Commercial Taxes Department must inform the result of the cases to the territorial joint commissioners, who must follow up the issue with the assessing officers and ensure that the orders of the court are implemented.
(x) The Commissioner can set up a separate wing to monitor the enforcement of the Court orders, who shall periodically follow up the action taken by the territorial Joint Commissioners and the assessing officers.
23. The Registry is directed to mark a copy of this order to the Principal Secretary to Government, State of Tamil Nadu, Commercial Taxes Department, Chennai and the Commissioner of Commercial Taxes, Chennai.