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2009 (4) TMI 843 - HC - VAT and Sales TaxComplaint of violation of principles of natural justice - Held that - Even according to the first respondent, there was a possibility, even if remote, that he could have come to a different conclusion, if the petitioner had explained the modus operandi of the transactions, in the manner in which they have done in the affidavit in support of the writ petitions. This statement substantiates the claim of the petitioner that if an enquiry had been held, under section 6A(2), the result could have been different. Therefore, the impugned orders are liable to be set aside, though not on the ground of violation of principles of natural justice, but on account of the failure of the first respondent to hold an inquiry and pass orders in terms of section 6A of the Central Sales Tax Act, 1956. Thus the writ petitions are allowed, the impugned orders of assessment are set aside and the matters remitted back to the first respondent for an enquiry under section 6A(2) of the CST Act.
Issues Involved:
1. Violation of principles of natural justice. 2. Failure to comply with the mandatory requirement of section 6A(2) of the Central Sales Tax Act, 1956. Detailed Analysis: 1. Violation of Principles of Natural Justice: The petitioner contended that the assessment orders were passed without providing sufficient opportunity to produce the necessary statements and records, thus violating the principles of natural justice. The court acknowledged that the writ jurisdiction could be invoked without exhausting alternative remedies if there was a violation of natural justice. The court cited precedents such as *Harbanslal Sahnia v. Indian Oil Corporation Ltd.*, *Popcorn Entertainment v. City Industrial Development Corpn.*, and *M.P. State Agro Industries Development Corpn. Ltd. v. Jahan Khan*, which reiterated that writ jurisdiction could be exercised despite the availability of alternative remedies in cases of natural justice violations. The first respondent provided detailed accounts of the opportunities given to the petitioner for each assessment year. However, the petitioner argued that the summons and notices issued were under the Tamil Nadu General Sales Tax Act (TNGST Act) and not under the Central Sales Tax Act (CST Act). The court examined the notices and found that many were indeed under the TNGST Act. Despite this, the court concluded that the petitioner had sufficient opportunity to present their case and that the principles of natural justice were not violated. 2. Failure to Comply with Section 6A(2) of the CST Act: The petitioner argued that the assessing authority did not conduct the mandatory inquiry under section 6A(2) of the CST Act after the petitioner had submitted Form F declarations. The court emphasized that section 6A(2) required the assessing authority to conduct an inquiry and reach a satisfaction regarding the truthfulness of the particulars in the Form F declarations. This inquiry was essential before rejecting the claim for exemption. The court referred to the judgments in *A. Dhandapani v. State of Tamil Nadu* and *Ashok Leyland Ltd. v. State of Tamil Nadu*, which highlighted the necessity of an inquiry under section 6A(2). The court found that the first respondent had not conducted any such inquiry and had rejected the claim for exemption based on an ad hoc basis, citing non-compliance with rule 4(3A) of the CST (Tamil Nadu) Rules, 1957, and inspection findings. The court concluded that the first respondent committed a serious error of jurisdiction by not conducting the mandatory inquiry under section 6A(2). The court also noted that the petitioner had filed Form F declarations and provided proof of payment of taxes in other states, which should have prompted an inquiry by the assessing authority. Conclusion: The court allowed the writ petitions, set aside the impugned assessment orders, and remitted the matters back to the first respondent for an inquiry under section 6A(2) of the CST Act. The first respondent was directed to issue a notice to the petitioner within two weeks, specifying two alternative dates for the inquiry and including proposals for both tax and penalty. The petitioner was instructed to participate in the inquiry and cooperate in completing the assessments. The first respondent was ordered to complete the assessment and pass an order covering section 6A(2) within four weeks from the receipt of the court's order. The writ petitions were allowed on these terms, and no costs were imposed.
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