2013 (5) TMI 233 - HC - VAT and Sales Tax

Pre-revision notices - TNVAT Act - petitioner removed the goods on stock transfer basis to the other States in India without reversing the Input Tax Credit and the PRN sought to invoke Section 19(4) of the TNVAT Act for reversal of the ITC amounts - petitioner contested against violation of principles of natural justice without even considering the request of the petitioner for extension of time to file their objections to the PRN - Held that - Held that - On a perusal of the impugned order, it reveals that a reference has been made to the respondent s Office Notices, dated 6.3.2013 and 15.3.2013 & also that the petitioner has filed replies, dated 15.3.2013 seeking time to file their objections. When such a request has been made by the petitioner, the same has to be looked into by the respondent by taking appropriate decision. On the other hand there is no order of stay in respect of the appeals pending before the appellate authority challenging the orders of the earlier assessment years, the respondent observed that the demand raised now is open for recovery and accordingly ordered recovery of the amounts. Such a course adopted by the respondent without considering the objections of the petitioner, is not sustainable - Writ Petitions disposed of, with a direction to the petitioner-Company to file their objections to the pre-revision notices within a period of two weeks from the date of receipt of a copy of this order.

Summary

Issues involved:
Challenging order passed by respondent in TIN proceedings, violation of principles of natural justice, consideration of objections before recovery proceedings, stay order requirement for recovery, sustainability of impugned orders.

Analysis:
The petitioner, a registered dealer under the TNVAT Act, challenged the respondent's orders in TIN proceedings seeking to quash the orders dated 21.3.2013. The petitioner contended that the orders were passed without considering their request for an extension of time to file objections to the pre-revision notices (PRN), violating principles of natural justice. The respondent argued that in the absence of a stay order for similar issues in previous years, they were justified in proceeding with recovery under Section 19(4) of the TNVAT Act.

The petitioner had been filing returns regularly and had PRNs issued against them for allegedly removing goods on stock transfer basis without reversing Input Tax Credit (ITC). The respondent ordered reversal of ITC amounts and initiated recovery proceedings without waiting for the petitioner's objections. The petitioner argued that the orders were passed without affording an opportunity for a hearing and without proper communication regarding the objections filed by them.

The court noted that the respondent had referred to the petitioner's replies seeking time to file objections in the impugned orders but proceeded with recovery without considering the objections. The court emphasized that the respondent should have waited for the petitioner to file objections as required under the TNVAT Act before initiating recovery proceedings. The court found the respondent's actions unsustainable as they did not consider the objections raised by the petitioner before ordering recovery.

The court disposed of the writ petitions with a direction for the petitioner to file objections to the PRNs within two weeks. The respondent was instructed to consider the objections, provide a hearing to the petitioner, and pass appropriate orders within four weeks from receiving the objections. Until then, a status quo was ordered to be maintained. The court concluded by stating that the recovery proceedings should be based on merits and in accordance with the law, emphasizing the importance of following due process and principles of natural justice.