2014 (6) TMI 877 - HC - VAT and Sales Tax

Levy of penalty - Notice not issued - Held that - Supreme Court as well as this Court has time and again held that levying of penalty without notice to the dealer is against the provision of law. The impugned order reveals that without any proposal notice the penalty has been levied. Hence, the penalty levied under Section 27(3)(b) of the TNVAT Act is liable to be set aside. Accordingly, the assessment order dated 22.05.2014 insofar as it relates to levy of penalty alone is set aside and the matter is remitted back to the authority concerned for passing fresh orders after affording an opportunity of personal hearing to the petitioner. - Decided in favour of assessee.

Summary

Issues:
Challenge to levy of penalty without proper notice under the Tamil Nadu Value Added Tax Act.

Analysis:
The petitioner challenged the assessment order solely on the grounds of the levy of penalty, reserving the right to appeal against the tax component. The counsel argued that penalty cannot be imposed without providing the dealer with a reasonable opportunity to present their case, as per Section 27(3) of the Act. However, the proviso in Section 27(4) mandates that no penalty shall be levied without giving the dealer a chance to show cause against the imposition. The writ petition was filed to challenge the imposition of penalty without proper notice.

The Government Advocate representing the respondent acknowledged that while a notice was issued regarding the revision of assessment, no notice was given for the levy of penalty as required by law. The respondent accepted the lack of compliance with the notice provision for penalty imposition and suggested that the assessment order be set aside for the penalty alone, advocating for the matter to be remitted back to the authority for fresh consideration.

After hearing both parties and examining the records, the High Court noted that levying a penalty without providing notice to the dealer goes against legal provisions. The court found that the penalty was imposed without a proposal notice, rendering it invalid. Consequently, the penalty levied under Section 27(3)(b) of the TNVAT Act was deemed to be set aside. The assessment order dated 22.05.2014, specifically concerning the penalty imposition, was annulled. The court directed the matter to be sent back to the relevant authority for reevaluation after granting the petitioner an opportunity for a personal hearing.

In conclusion, the writ petition was allowed, with no costs imposed, and the miscellaneous petitions were closed. The judgment highlighted the importance of adhering to procedural requirements, especially regarding the imposition of penalties, to ensure fairness and compliance with the law.