2015 (2) TMI 1153 - HC - VAT and Sales Tax

Seeking cross-examination of persons - Section 81 of TN VAT Act - Held that - prior to the introduction of the Act 2006 with effect from 2007, this court had considered a similar issue with regard to the Tamil Nadu General Sales Tax Act in the case of T. M. Rajaganapathi Traders v. Commercial Tax Officer, Salem reported in 2005 (2) TMI 781 - MADRAS HIGH COURT . Section 54 of the Tamil Nadu General Sales Tax Act is pari materia to section 81 of 2006 Act. This court held that aggrieved person is entitle to cross-examine and that the authority concerned shall issue summons in terms of the provisions of the said Act. Similarly as per Section 81 of the 2006 Act, the authority is empowered to issue summons to the persons and give an opportunity to the dealer to cross-examine them, without which there would be no scope for the authority concerned to rely on the materials for determination of tax liability of the dealer. - Petition disposed of

Summary

Issues:
Challenge to order of respondent dated January 12, 2015 and direction for fresh orders after grant of enquiry and opportunity as requested by the petitioner.

Analysis:
The petitioner challenged the respondent's order dated January 12, 2015, seeking a direction to pass fresh orders after granting an enquiry and opportunity as requested in representations dated February 5, 2014, and February 17, 2014. The petitioner contended that the respondent assessed them under section 22(4) of the Tamil Nadu Value Added Tax Act, 2006, due to an alleged contravention of section 21 of the Act, which mandates filing returns by registered dealers. The petitioner requested examination of four individuals mentioned in a notice to the Assistant Commissioner. However, the impugned order indicated discrepancies in the authority's statements, highlighting a lack of proper consideration and non-application of mind.

The High Court emphasized the necessity of conducting an enquiry or providing a personal hearing, especially when proceeding against a party under section 22 of the 2006 Act. Referring to section 81 of the Act, the Court underscored the right to cross-examine individuals, stressing the importance of following due process. Citing a previous case under the Tamil Nadu General Sales Tax Act, the Court reiterated the entitlement of aggrieved parties to cross-examine witnesses, emphasizing the authority's duty to issue summons as per statutory provisions.

Furthermore, the Court clarified that under section 81 of the 2006 Act, the authority must summon individuals and allow the dealer to cross-examine them to ensure a fair determination of tax liability. Consequently, the Court set aside the impugned order and directed the authority to adhere to section 81 of the Act, emphasizing the mandatory nature of providing an opportunity for hearing before passing final orders. The respondent was instructed to finalize the orders within four months, with a provision for conducting proceedings on a day-to-day basis if necessary. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.