'Facilitating Tax Evasion By Allowing 3rd Party To Access Portal ?': Madras HC Asks Cyber Crime And State Tax Departments To Investigate

The Madras High Court directed the State Tax and Cyber Crime Departments to investigate whether a company was facilitating tax evasion by allowing a third party to use his login ID.

In this case,  the Petitioner company was delivered recovery notices by the State Tax Department (Third Respondent). The Petitioner contended it was unable to access the online return portal. It, therefore, filed the returns manually and filed a complaint in a cyber cell. 

The Bench of Justice C. Saravanan observed, “The Commercial Tax Department shall co-ordinate with the rest of the respondents and the 4th respondent and investigate into the complaint of the petitioner. This exercise shall be completed within a period of eighteen (18) months from the date of receipt of a copy of this order. Till such investigation is completed, all revenue recovery proceedings against the petitioner shall be kept in abeyance. In case, the complaint of the petitioner turns out to be untrue or was intended to facilitate fraud being committed using the login ID of the petitioner, the assets of the petitioner shall be brought to sale”.

Advocate Hari Radhakrishnan appeared for the Petitioner and Government Advocate K. Vasanthamala appeared for the First Respondent (Commissioner of Commercial Taxes).

Per the Petitioner’s contentions, it was filing returns electronically until December 2013 but was unable to log into the portal after that. The Petitioner escalated the issue to the Assistant Commissioner (CT/Second Respondent) multiple times, but the issue was not resolved. The Petitioner therefore filed returns manually. The Petitioner had received a recovery notice for Rs 11,63,24,233/- for the assessment years 2014-15 and 2015-16 issued by the State Tax Officer (Third Respondent). The Petitioner approached the High Court challenging the recovery notice.

The Court noted that the Petitioner had filed a complaint with the Cyber Crime Department alleging that his login ID was misused. Therefore, the Court has ordered the Commercial Tax Department to coordinate with the Cyber Crime Department and investigate the complaint of the Petitioner. The Court granted a period of eighteen months to complete the exercise from the date of the order.

Furthermore, the Court directed the Commissioner to halt all recovery proceedings against the Petitioner till such investigation is completed.

Additionally, the Court noted that in case, the complaint turns out to be untrue or was intended to facilitate fraud being committed using the login ID of the Petitioner, the assets of the Petitioner shall be brought to sale.

Cause Title: M/s.Shewil Trading Company v The Commissioner of Commercial Taxes

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