2007 (2) TMI 607 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Non-compliance with appellate authority's directions.
3. Hierarchical statutory system and binding nature of appellate orders.
4. Remedies available to the Revenue.

Summary:

1. Violation of principles of natural justice:
The petitioner challenged the assessment order dated September 30, 2003, for the assessment year 1993-94, arguing it was passed without issuing a notice and without following the directions of the appellate authority, thus violating the principles of natural justice and the Tamil Nadu General Sales Tax Act, 1959.

2. Non-compliance with appellate authority's directions:
The Appellate Assistant Commissioner (CT IV) had remanded the case with specific directions on July 17, 2001. The assessing officer, however, reconfirmed the earlier order without adhering to these directions. The appellate authority had directed verification of transactions with Tvl. EID Parry Ltd. and Tvl. Shaw Wallace Co. Ltd., which was not complied with by the assessing officer.

3. Hierarchical statutory system and binding nature of appellate orders:
The court emphasized the hierarchical statutory system u/s 31, 32, 33, 34, 35, and 36 of the TNGST Act, which provides a complete machinery to challenge assessment orders. The appellate jurisdiction inherently carries the power to issue binding corrective directions. The failure of the assessing officer to follow these directions undermines the hierarchical system and judicial discipline, as highlighted in cases like *Titaghur Paper Mills Co. Ltd. v. State of Orissa* and *Union of India v. Kamlakshi Finance Corporation*.

4. Remedies available to the Revenue:
The court noted that if the Revenue finds the appellate authority's order unacceptable, it has remedies such as appealing the order or invoking suo motu powers of higher authorities u/s 35E of the Act. The assessing officer's disregard for the appellate authority's directions was deemed legally unsustainable.

Conclusion:
The writ petition was allowed, and the impugned assessment order was set aside with a specific direction to the assessing officer to follow the directions given by the Appellate Assistant Commissioner in his order dated July 17, 2001. There was no order as to costs.