2008 (9) TMI 914 - HC - VAT and Sales Tax

Order of assessment challenged - Held that - The impugned order by way of revision of assessment should not have been passed without giving the assessee an opportunity of personal hearing. But since the same has been denied, the impugned order is hereby quashed. Allow the appeals and are constrained to hold that the learned judge of the writ court was not correct in his conclusion in dismissing the writ petitions, inter alia, on the ground of non-exhaustion of alternative remedy in the facts and circumstances of the case discussed above. The judgment of the learned judge is set aside. Therefore, direct that the appellant/petitioner must appear before the second respondent in these appeals, who passed the impugned order, within a period of seven days from the date of getting a certified copy of this judgment and thereupon, the second respondent will fix the personal date of hearing in which the appellant must appear and the hearing should be concluded within two weeks thereafter.

Issues Involved:
1. Principles of natural justice and denial of personal hearing.
2. Applicability of alternative remedy in tax matters.
3. Interpretation of section 16(1)(a) of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Principles of Natural Justice and Denial of Personal Hearing:
The petitioner contended that the assessment order was passed without providing a personal hearing, despite a specific request for it in their representation dated November 28, 2007. The court examined whether this denial amounted to a violation of natural justice. The court referred to various authoritative texts and judgments which emphasize that a fair hearing often includes an oral hearing, especially in complex factual disputes. The court cited several Supreme Court judgments, including *State of Bombay v. Nurul Latif Khan*, *Travancore Rayons v. Union of India*, and *Ram Chander v. Union of India*, which support the necessity of personal hearings in certain circumstances to ensure fairness and proper adjudication. The court concluded that the denial of a personal hearing in this case was a violation of the principles of natural justice.

2. Applicability of Alternative Remedy in Tax Matters:
The court addressed the issue of whether the writ petition should be dismissed due to the non-exhaustion of alternative remedies available under the Tamil Nadu General Sales Tax Act, 1959. The court noted that while the existence of an alternative remedy does not oust the jurisdiction of the writ court under Article 226 of the Constitution, it generally operates as a restraint. However, exceptions exist, such as cases involving the violation of fundamental rights, principles of natural justice, or where the proceedings are without jurisdiction. The court referred to the judgment in *Whirlpool Corporation v. Registrar of Trade Marks*, which outlines these exceptions. The court concluded that the present case falls within these exceptions due to the violation of natural justice, and therefore, the writ petition was maintainable despite the availability of an alternative remedy.

3. Interpretation of Section 16(1)(a) of the Tamil Nadu General Sales Tax Act, 1959:
The court examined whether the provision for a "reasonable opportunity to show cause" under section 16(1)(a) of the Act includes the right to a personal hearing when specifically requested. The court referred to the Commissioner's circular dated April 20, 2001, which mandates a personal hearing if requested by the assessee. The principle of contemporanea expositio was applied, which allows for the interpretation of statutory provisions in light of long-standing administrative practices. The court held that the circular, being a contemporaneous administrative interpretation, must be read into section 16(1)(a). Thus, the reasonable opportunity to show cause under this section includes the right to a personal hearing when demanded by the assessee.

Conclusion:
The court quashed the impugned assessment order due to the denial of a personal hearing, which violated the principles of natural justice. The court directed the petitioner to appear before the assessing authority within a specified period for a personal hearing, after which a new assessment order could be passed. The judgment of the writ court was set aside, and the appeals were allowed. The court did not comment on the merits of the case of either the petitioner or the Revenue.

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