2001 (1) TMI 956 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of Section 28-A of the Tamil Nadu General Sales Tax (TNGST) Act, 1959.
2. Binding nature of clarifications issued under Section 28-A on assessing authorities and appellate authorities.
3. Right to a hearing before issuing clarifications under Section 28-A.
4. Impact of clarifications on quasi-judicial proceedings.

Detailed Analysis:

1. Validity of Section 28-A of the TNGST Act, 1959:
The petitioners challenged the constitutionality of Section 28-A, arguing it was ultra vires the fundamental rights under the Constitution of India. They contended that the provision interfered with the quasi-judicial functions of the assessing authorities and appellate authorities, thus denying the assessees a fair verdict. The Tribunal, after analyzing the provision, held that Section 28-A is perfectly valid and intra vires the Constitution of India. The Tribunal stated that the section's purpose is to ensure uniformity in tax assessment and collection, and no prejudice would be caused to the parties by its application.

2. Binding Nature of Clarifications Issued Under Section 28-A:
The Tribunal differentiated between clarifications issued under sub-sections (1) and (2) of Section 28-A. It held that clarifications under sub-section (1) bind the parties who sought them, including societies or associations and their members. However, these clarifications can be contested during assessment and appellate proceedings. For clarifications under sub-section (2), the assessing officer and Appellate Assistant Commissioner must give an independent decision based on the arguments and materials presented before them. The Tribunal emphasized that sub-section (3) relates to administrative matters and does not override the quasi-judicial authority of assessing officers or appellate authorities.

3. Right to a Hearing Before Issuing Clarifications:
The petitioners argued that Section 28-A(3) made the clarifications binding without providing an opportunity for the affected assessees to be heard, violating natural justice principles. The Tribunal clarified that when dealers seek clarification under sub-section (1), they provide all necessary materials, and thus, there is no violation of natural justice. For clarifications under sub-section (2), which are issued suo motu, there is no provision for a hearing. However, these clarifications can be contested during subsequent quasi-judicial proceedings.

4. Impact of Clarifications on Quasi-judicial Proceedings:
The Tribunal reiterated that quasi-judicial proceedings are independent and should not be influenced by external directions, including clarifications from the Commissioner. The Tribunal cited various judgments to support the principle that quasi-judicial authorities must render independent decisions based on the materials and arguments presented before them. It concluded that clarifications under Section 28-A should not interfere with the quasi-judicial functions of assessing officers or appellate authorities.

Conclusion:
The Tribunal upheld the validity of Section 28-A of the TNGST Act, stating that it does not prejudice the parties or transgress their rights. It provided the following directions:
1. Section 28-A is valid and intra vires the Constitution.
2. Clarifications under sub-section (1) bind the parties who sought them but can be contested in assessment and appellate proceedings.
3. Clarifications under sub-section (2) can be contested before assessing officers and Appellate Assistant Commissioners, who must give independent decisions.
4. For administrative purposes, clarifications under both sub-sections (1) and (2) are binding on subordinate officers.

The Tribunal dismissed the petitions to quash the impugned notices and allowed time for filing objections, which the first respondent must consider in accordance with the principles enunciated in the judgment. The order was issued on January 25, 2001.

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