2010 (7) TMI 898 - HC - VAT and Sales Tax

Order of assessment dated March 2, 2006 challenged - Held that - It is seen that there is violation of rule 52(1) of the Rules. Further, it is to be noted that it is the specific case of the petitioner that they are in possession of all the documents in support of their contentions and these records were not available at the time of the original assessment and were produced before the appellate authority and since the appellate authority was of the opinion that the genuineness and correctness of those records cannot be verified at the appellate stage, set aside the order of assessment dated February 28, 1997 and remanded the matter to the first respondent to enable the petitioner to produce the records. Therefore, the reason assigned by the first respondent for passing the impugned order of assess ment is not sustainable. It is therefore held that the assessee did not have due notice as contemplated under rule 52(1) of the Rules. Writ petition is allowed and the impugned order is set aside and the first respondent is directed to issue a notice, fixing the time and date for the petitioner to produce the records.

Summary

Issues:
Challenge to order of assessment dated March 2, 2006 under CST and TNGST Acts based on non-production of foreign buyers' orders for exemption on export, violation of natural justice, and inclusion of penalty under TNGST Act.

Analysis:
The petitioner, a registered dealer under the Central Sales Tax Act (CST) and Tamil Nadu General Sales Tax Act (TNGST), challenged the order of assessment dated February 28, 1997, disallowing exemption on export due to non-production of foreign buyers' orders. The Appellate Assistant Commissioner set aside the order and remanded the matter for fresh disposal, directing the petitioner to provide the necessary records to claim exemption under the CST Act. The petitioner complied by producing records, but the assessing authority claimed not to have received the assessment file and demanded records after intimation from the first respondent. Subsequently, the first respondent confirmed the original order of assessment on March 2, 2006, leading to the writ petition.

The impugned order was contested on grounds of contravening the appellate authority's direction, violating natural justice by not providing notice or opportunity to the petitioner, and lacking application of mind as the appellate authority had already set aside the original order for fresh consideration. Additionally, the inclusion of penalty under section 12(3)(b) of the TNGST Act in the impugned order was deemed unjustified. The Government Advocate for the first respondent argued that a notice was issued to produce materials, but the petitioner failed to respond, leading to the confirmation of the original order of assessment.

Upon careful consideration, the court noted that after the appellate authority's decision to set aside the original order, there was no basis for confirming it again. The impugned order's assertion of confirming the original order was deemed untenable. Rule 52(1) of the Tamil Nadu General Sales Tax Rules was cited, emphasizing the violation of proper notice service procedures. The petitioner's possession of required documents, produced before the appellate authority, was highlighted, indicating that the first respondent's reason for the impugned order was not justifiable. Consequently, the court held that the petitioner was not duly served notice as per the rules.

In conclusion, the writ petition was allowed, setting aside the impugned order. The first respondent was directed to issue a notice for the petitioner to produce records, following which a decision should be made after affording the petitioner an opportunity, in compliance with the law.