1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED:26.07.2011 CORAM: THE HONOURABLE MR.JUSTICE R.SUDHAKAR W.P(MD)No.8284 of 2011 M/s. Fine Chemicals, represented by its Partner V.Venkatasamy, 336, Alagai Nagar, Rajapalayam-626 117, Virudhunagar District. :Petitioner -Vs- The Assistant Commissioner of Commercial Taxes-II(FAC), Commercial Taxes Department, Rajapalayam, Virudhunagar District.:Respondent PRAYER:Writ Petition is filed under Article 226 of the Constitution of India, to issue a Writ of Certiorari to call for the records of the case on the files of the respondent in proceedings dated 29.11.2010 in TNGST No.6061320/1996-1997 and quash the same. For Petitioner : Mr.R.Janarthanan For Respondent : Mr.TR.Janarthanam,Additional Government Pleader. ORDER This Writ Petition has been filed by the petitioner for a Writ of Certiorari to call for the records of the case on the files of the respondent in proceedings dated 29.11.2010 in TNGST No.6061320/1996-1997 and quash the same. 2.Heard Mr.R.Janarthanan, learned counsel for the petitioner, Mr.TR.Janarthanam, learned Additional Government Pleader, who takes notice for the respondent. 3.By consent, the writ petition itself is taken up for final disposal. 4.The petitioner, who is the dealer under the Tamil Nadu General Sales Tax Act, was assessed at the total and taxable turn over of Rs.20,82,344/- for the year 1996-1997 by the order of the Assistant Commissioner(CT)-II (FAC), Rajapalayam on 23.02.1998. The assessee claimed certain benefits of sales effected to an 100% Export Oriented Unit under Form XVII. That was accepted by the assessing authority in the order dated 23.02.1998 Thereafter, on 31.07.1998, a pre-assessment notice was issued by the very same authority seeking to reject the claim for exemption granted in terms of Form XVII for sales effected to 100% Export Oriented Unit. The petitioner gave a reply on 18.08.1998 and since no action was taken either to drop the proceedings or indicating that the proceeding will go on, the petitioner gave another reply on 12.06.2003 stating that the petitioner is entitled to exemption from tax in respect of the sale effected to 100% Export Oriented Unit and the assessment order passed is in order. In proof of making the sales to 100% Export Oriented Unit, they have submitted the green card also. https://hcservices.ecourts.gov.in/hcservices/ 2 5.After receipt of the reply dated 18.08.1998 i.e. one month after the date of pre assessment notice, there was no action taken. As stated above, the petitioner followed it by another reply on 12.06.2003, to remind the authority not to take action without properly appreciating the case of the petitioner. Even after the receipt of the subsequent letter dated 12.06.2003, the authority did not pursue the matter and left it in cold storage for more than 7 years. One fine morning, the present officer woke up and passed an order on 29.11.2010 rejecting the objection raised by the petitioner and determined the taxable turn over in terms of the pre- assessment notice dated 31.07.1998, which is almost more than 12 years from the date of the original notice. No doubt, the initiation of the proceedings may be well within the powers of the authority under Section 16 of the Act, but the grievance of the petitioner is that the adverse order has peen passed without an opportunity of hearing, particularly when the authority has decided to reject the petitioner's plea after so many years He, therefore, pleads prejudice, arbitrariness and violation of principles of natural justice. 6.This Court is inclined to interfere with the impugned proceedings only on the ground that there has been an inordinate and unexplained delay on the part of the authority to conclude the proceedings after more than 12 years from the date of original notice and 7 years from the date of last reply from the petitioner which is of the year 2003. The petitioner could have been called upon to appear and explain their stand and to clarify their position in view of the long period of time that has elapsed. 7.Section 16 of the Act provides that the assessee should be given a reasonable opportunity to show cause against such assessment. Having complied with one part of the requirement of law by issuing notice, the then authority put the entire issue in a cold storage for more than 12 years, that too, after the assessee gave his reply on 18.08.1998 itself. There is no reason given as to why the proceedings was not concluded then. The unexplained delay itself would amount to prejudice to the assessee, as he would have been under impression that the authority has dropped the pre- assessment notice. After the last reply of the year 2003, if for more than 7 years no action has been taken, one can reasonably presumed that the authorities are not pursuing the matter any further. If the authority wanted to pursue the matter further, they should have informed the assessee that the matter is to be taken up for consideration and an opportunity should have been given, so that, the petitioner could have put forward his plea on merits in continuation to the reply already given. The lack of opportunity to defend the belated action justifies the petitioner's plea of arbitrariness and violation of principles of natural justice, more so, when the petitioner is visited with tax liability after a very long period of time. 8.Only on the ground of inordinate and unexplained delay and considering the gross violation of principles of natural justice and arbitrariness apparent in the action on the part of the respondent in passing the order after more than 12 years from the date of pre-assessment notice, this Court is inclined to interfere with the order under challenge. Accordingly, the same is set aside and the matter is remitted back to the authority for https://hcservices.ecourts.gov.in/hcservices/ 3 reconsideration, after giving the petitioner an opportunity of personal hearing and the petitioner is entitled to put forward all his legal plea before the authority. 9.It is desirable that the respondent Department desists from passing such orders, after long period of time i.e. to say after nearly 5 to 10 years as it would cause serious prejudice to the assessee of small scale sector, who will be made to suffer penal consequences and tax liability, which they may not foresee. The assessee should be able to defend their claim as earliest, so that they will pursue appropriate remedy as per statute and it will avoid rude shock as in the present case. The respondent Department is advised to desist from taking such action which may enable assessee to come to the Court on the ground of arbitrariness or violation of principles of natural justice. 10.In the result, the impugned proceedings in TNGST No.6061320/1996- 1997, dated 29.11.2010 is set aside and the matter is remitted back to the authority for fresh consideration on merits. The writ petition is ordered as above. No costs. Sd/- Deputy Registrar (Writs) / TRUE COPY / Assistant Registrar To: The Assistant Commissioner of Commercial Taxes-II(FAC), Commercial Taxes Department, Rajapalayam, Virudhunagar District. +1CC to Mr.R.Janarthanan, Advocate. SR.No.24588. +1CC to The Special Government Pleader. SR.No.24993. Ssl RP/08.08.2011/3P/4C. W.P(MD)No.8284 of 2011 26.07.2011 https://hcservices.ecourts.gov.in/hcservices/