2010 (9) TMI 959 - HC - VAT and Sales Tax

Writ of certiorari, to quash the order of the Special Committee (Commercial Taxes), Chennai, the second respondent herein dated May 21, 2008 by which the second respondent has rejected the claim made by the petitioner Held that - The Special Committee has not exercised the powers as contemplated under the Act and therefore, the impugned order is set aside with a direction to the Committee to re-examine the application submitted under section 16D of the Act afresh and pass a detailed order within a period of four weeks from the date of receipt of a copy of this order. Accordingly, the writ petition is allowed.

Summary

Issues:
Petitioner's claim rejection by Special Committee under violation of natural justice principles

Analysis:
The petitioner, a manufacturer of M.S. Hex Bolts, challenged the rejection of their claim by the Special Committee (Commercial Taxes) in Chennai. The petitioner alleged that the enforcement wing's inspection recorded stock differences, which were rectified by the petitioner, but not considered by the first respondent. A pre-assessment notice was issued, and despite the petitioner's objections, the first respondent confirmed the proposal. The petitioner then applied under section 16D of the TNGST Act, which was rejected by the Special Committee citing no violation of natural justice principles. The petitioner contended that correct records were maintained, and penalties levied were arbitrary and unlawful. The Special Government Pleader argued that the assessment was correct, as the petitioner failed to file statutory appeals and maintain proper records as required by law.

The Special Committee's order was challenged on the grounds that it did not consider the alleged violations of natural justice and factual inaccuracies in the assessment. The petitioner's contentions regarding rectification of discrepancies and acknowledgment of replies were not adequately addressed. The court noted that the Special Committee failed to examine whether there was a violation of the Act or Rules and did not provide a detailed analysis of the petitioner's submissions. The wide powers of the Special Committee are intended to address violations even when appeals are not filed, but in this case, the Committee's decision lacked thorough examination. Consequently, the court set aside the impugned order and directed the Committee to re-examine the application, ensuring a detailed order within four weeks.

In conclusion, the court found that the Special Committee did not properly exercise its powers as mandated by the Act. The lack of detailed analysis and consideration of alleged violations led to the setting aside of the order for a fresh examination. The petitioner's concerns regarding natural justice principles and factual inaccuracies in the assessment need to be adequately addressed by the Committee in the revised decision.