Madras HC in the case of M/s. Sri Ganesh Lubricants Versus Commercial Tax Officer

Case Covered:

M/s. Sri Ganesh Lubricants

Versus

Commercial Tax Officer

Facts of the Case:

This Writ Petition has been filed challenging the impugned demand of the first respondent, dated 17.04.2017 calling upon the petitioner to pay a sum of Rs.21,33,005/- towards dishonored cheques totally amounting to Rs.21,33,005/-, which was issued by the petitioner in favour of the first respondent, on the date of inspection, at their premises, by the Enforcement Wing Officials of the Second respondent.

The primary ground for challenge is that the spot collection of taxes is wholly illegal and unwarranted when the assessment for the respective year is still pending.

Observations:

It is settled law that recovery of tax in advance by inspecting officials (Enforcement Wing) is illegal. In the counter affidavit filed by the first respondent, in paragraph No.3, the first respondent has admitted that four cheques given by the petitioner on the date of inspection were only towards the payment of tax even though in the impugned demand, they have mentioned that it is towards compounding fees. Since the collection of cheques from the petitioner is admittedly, towards payment of tax, as per the settled law, the said collection by the second respondent on the date of inspection from the petitioner is illegal without there being any assessment order. It is also admitted fact that no assessment order has been passed pursuant to the impugned notice of demand, dated 17.04.2017.

The Order of the Court:

This Court, after having heard the rival submissions as well as after pursuing the impugned notice of demand as well as the Judgment cited by the learned counsel for the petitioner, is of the considered view that the impugned demand made by the respondent is illegal without there being an assessment order.

For the foregoing reasons, the impugned demand, dated 17.04.2017 issued by the first respondent is hereby quashed and the Writ Petition is allowed. However, liberty is granted to the respondents to complete the assessment against the petitioner in accordance with the law, and if it is found that the petitioner is liable to pay tax or penalty or other charges, the same shall be recovered from him after completion of assessment proceedings in accordance with the law. No costs. Consequently, connected Miscellaneous Petitions are closed.

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