2008 (1) TMI 850 - HC - VAT and Sales Tax

Best of judgment assessment - whether there is a violation of the principles of natural justice for not providing sufficient opportunity to the petitioner - Held that - Perusal of the proceedings dated August 31, 2007 produced before this court shows that the committee members have to examine the records of the assessing authority in respect of any proceeding or order is in violation of provisions of the Act or the Rules framed thereunder or without following the principles of natural justice and pass appropriate orders. In the case on hand, the first respondent applying the proviso of section 16D of the Act has disposed of the petitions as not entertained. When the statute contemplates the committee of three members to examine the petition under section 16D of the Act, the Commissioner alone cannot independently decide the petitions filed under section 16D of the Act. Therefore, exercise of the jurisdiction by the Commissioner alone is not in accordance with the statutory provision. Therefore, without going into the merits of the case, the impugned orders are set aside. The matters are remitted back to the Committee to decide the merits of the case after giving opportunity to the petitioner. The parties are at liberty to raise the issue of maintainability of the petitions and make their submissions before the committee.

Summary

Issues:
Challenging best of judgment assessment under TNGST and CST Acts; Rejection of applications by the Special Committee under section 16D of TNGST Act; Validity of rejection order; Jurisdiction of the Special Committee; Compliance with principles of natural justice.

Analysis:
The petitioner, a cotton yarn manufacturer, was assessed to tax under best judgment assessment under the TNGST and CST Acts. The petitioner challenged these assessments by filing applications before the Special Committee under section 16D of the TNGST Act. The first respondent rejected these applications, leading to the present writ petitions. The main contention was the lack of opportunity to produce books of account during a strike-induced lockout, resulting in hasty assessments without following due process.

The rejection order was based on the argument that the petitioner had been granted liberty to file statutory appeals in previous writ petitions, making applications under section 16D inappropriate. The respondent argued that the Special Committee lacked jurisdiction to decide on the correctness of the assessment orders for the relevant period. However, the court found that the Special Committee should have been informed of the previous orders granting liberty to file appeals, as the proviso to section 16D restricts jurisdiction when other legal proceedings are pending.

Further, the court noted that the Special Committee should consist of three members to examine petitions under section 16D, but the rejection order was passed by the Commissioner alone, lacking compliance with statutory provisions. Therefore, without delving into the case's merits, the court set aside the rejection orders and remitted the matters back to the Committee for a decision after providing the petitioner with an opportunity. The parties were allowed to raise maintainability issues and present their arguments before the Committee.

In conclusion, the writ petitions were allowed with directions for reconsideration by the Committee, emphasizing compliance with procedural requirements and principles of natural justice. No costs were awarded, and connected miscellaneous petitions were closed.