2008 (3) TMI 634 - HC - VAT and Sales Tax

Assessment on calculated basis - Held that - Admittedly, the petitioner-corporation are the manufacturers of common salt and they purchase the common salt within the State and sell within the State as well as outside the State of Tamil Nadu. Further it is seen that the assessments made by the second respondent have been calculated based on the relevant provisions under the Rules contemplated. However, there were objections by the petitioner, but those objections have to be considered only after affording an opportunity of personal hearing to the petitioner and therefore, non-affording of opportunity of personal hearing to the petitioner has vitiated the proceedings of the second respondent and on that sole ground, the impugned proceedings cannot be sustained and therefore, they are liable to be set aside. However, after providing an opportunity of personal hearing to the petitioner, the matter has to be decided afresh taking note of the assessments made as well as the objections submitted by the petitioner. In view of the above, the writ petitions are allowed and the impugned orders passed by the second respondent are set aside and the matter is remanded back to the respondents.

Summary

Issues:
Challenge to assessment orders under CST Act, 1956 for years 2000-01 and 2001-02 based on freight charges; Opportunity of personal hearing not provided before passing assessment orders.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, challenged assessment orders under the CST Act for the years 2000-01 and 2001-02, disputing the levy of tax on freight charges on the turnover of common salt. The petitioner contended that the second respondent failed to provide a personal hearing before finalizing the assessments, which is a mandatory requirement under established rules. Previous appeals by the petitioner were allowed, emphasizing the importance of personal hearings in assessment proceedings.

The respondents argued that the assessments were made based on sampling and analysis procedures, asserting that the freight charges incurred by the seller for transporting goods to the buyer's place constitute part of the turnover. They cited legal precedents to support their position, emphasizing that the transfer of property of goods at the buyer's place falls within the scope of turnover. The respondents contended that objections were duly considered, negating the necessity for a personal hearing.

After considering the submissions from both sides, the court held that the failure to provide a personal hearing to the petitioner invalidated the assessment proceedings. The court emphasized the importance of affording the petitioner an opportunity for personal hearing before finalizing assessments. Consequently, the impugned orders were set aside, and the matter was remanded back to the respondents for fresh consideration after providing the petitioner with a personal hearing. The court directed the respondents to issue a notice to the petitioner for a personal hearing within one week and instructed them to pass final assessment orders within six weeks after the hearing.

In conclusion, the court allowed the writ petitions, emphasizing the necessity of personal hearings in assessment proceedings to ensure procedural fairness. The judgment highlighted the importance of following established rules and providing parties with an opportunity to present their case before finalizing assessments under the CST Act, 1956.