2009 (4) TMI 866 - HC - VAT and Sales Tax

Non issuance of notice - interest under section 24(3) called - Held that - The counter filed by the second respondent clearly shows that no notice was issued to the petitioner before issuing the notice dated December 31, 2007 to pay interest. The respondents sought to justify the order on the ground that the details sought for by the petitioner were given under the Right to Information Act. In fact, the details were furnished only in the impugned order dated March 31, 2008 and not before. The second respondent has taken a definite stand in the counter statement that no notice was required to be issued before passing an order under section 24(3) of the Act for payment of interest and in fact, no such notice was also issued. In such circumstances, there was a clear violation of the principles of natural justice and as such, the petitioner was justified in filing the writ petition without filing the statutory revision. Accordingly, the impugned order dated March 31, 2008 on the file of the first respondent is quashed and the matter is remitted to the second respondent for fresh consideration.

Issues:
- Appeal against rejection of order dated February 12, 2008
- Levy of interest under section 24(3) of the Act
- Right to Information Act, 2005 provisions
- Violation of principles of natural justice

Analysis:
1. Appeal against Rejection of Order (Issue 1): The petitioner, engaged in manufacturing neem oil and neem oil cake, appealed against the rejection of the order dated February 12, 2008. The first respondent, in the proceedings dated March 31, 2008, stated that there was no requirement to issue specific forms for the levy of interest under the Tamil Nadu General Sales Tax Act, 1959. However, the petitioner contended that they were not provided with the necessary documents before the order was passed, depriving them of the opportunity to file objections. The High Court noted that the petitioner should have been given notice before any adverse orders were passed, emphasizing the importance of following principles of natural justice.

2. Levy of Interest under Section 24(3) of the Act (Issue 2): The second respondent had called upon the petitioner to pay interest under section 24(3) of the Act for belated payment of deferral dues. The petitioner argued that no prior notice was issued before quantifying the interest amount. The High Court observed that while the Act did not explicitly require notice before quantifying interest, the principles of natural justice necessitated putting the assessee on notice, especially considering the civil consequences of such orders. The Court found that the proceeding initiated by the second respondent to recover interest was against the principles of natural justice.

3. Right to Information Act, 2005 Provisions (Issue 3): The petitioner invoked the Right to Information Act, 2005, seeking copies of demand notices and details of notices issued by the assessing authority. The second respondent justified the automatic levy of interest without the need for issuance of notice. However, the High Court held that the information provided to the petitioner was only after the appeal, indicating a violation of natural justice principles. The Court emphasized the importance of providing necessary information to the assessee before passing orders involving civil consequences.

4. Violation of Principles of Natural Justice (Issue 4): The High Court found a clear violation of the principles of natural justice as no notice was issued to the petitioner before the order dated December 31, 2007. The Court noted that the information sought by the petitioner was only furnished after the appeal, indicating a lack of procedural fairness. Consequently, the Court quashed the impugned order dated March 31, 2008, and remitted the matter to the second respondent for fresh consideration, granting the petitioner an opportunity to file objections.

In conclusion, the High Court's judgment focused on upholding the principles of natural justice, emphasizing the importance of providing notice and necessary information to the assessee before passing orders with civil consequences. The Court granted relief to the petitioner by quashing the order and remitting the matter for fresh consideration, highlighting the need for procedural fairness in tax assessments.

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