2014 (9) TMI 694 - HC - VAT and Sales Tax

Principle of natural justice - According to the petitioner, the 1st respondent has passed the impugned orders influenced by the orders of the 2nd respondent - TNVAT - levy of tax on chemicals used by the petitioner in the works contract (processing of exposed negatives) to recover TDS on the alleged construction, repair and maintenance expenses and to recover the TDS on the maintenance charges paid to the foreign supplier which were issued based on the directions of the 4th respondent. - Held that - since it is stated by the learned Counsel for the petitioner state that the 1st respondent has followed the order of the 2nd respondent and the petitioner themselves are ready to deposit 25% of the demanded tax amount in each case to show their bonafide, the impugned orders are set aside - The petitioner are directed to deposit 15% of the demanded tax amount in each case on or before 31.7.2014 in first instalment and to deposit the remaining 10% in each case on or before 31.8.2014 in 2nd instalment - matter remanded back for fresh order - Decided in favour of assessee.

Issues:
Challenging revised assessment orders under TNVAT Act for assessment years 2007-2008 to 2011-2012 based on directions from respondents. Allegation of lack of independent decision-making by the assessing authority. Petitioner's contention of orders being influenced by superior officers.

Analysis:

1. Challenging Revised Assessment Orders:
The Writ Petitions were filed to challenge the revised assessment orders issued to the petitioner for assessment years 2007-2008 to 2011-2012 under the TNVAT Act. The petitioner, engaged in film processing and distribution, had purchased chemicals for business purposes during the said assessment years. The dispute arose when the Enforcement Wing of the Commercial Taxes Department, based on instructions from respondents, proposed levying tax on chemicals used by the petitioner. The petitioner objected to these proposals, leading to a series of notices and objections filed by both parties.

2. Allegation of Lack of Independent Decision-Making:
The main contention raised by the petitioner was that the assessing authority did not apply independent judgment while passing the revised assessment orders. It was argued that the orders were influenced by the directions of the 2nd respondent, thus rendering them vitiated. Citing precedents, the petitioner emphasized the importance of the assessing authority's independent duty to scrutinize materials for assessment without being influenced by superior officers. The petitioner sought a remand of the cases for fresh orders, highlighting the need for an unbiased decision-making process.

3. Petitioner's Allegation of Influence by Superior Officers:
The petitioner further argued that the 1st respondent had followed the order of the 2nd respondent in passing the impugned assessment orders. The petitioner offered to deposit 25% of the demanded tax amount in each case to demonstrate good faith. However, the assessing authority contended that the orders were not solely based on the directions of the 2nd respondent and that the petitioner's voluntary deposit would be taken into consideration.

4. Judicial Precedents and Decision:
Referring to relevant judicial precedents emphasizing the quasi-judicial nature of assessment proceedings, the Court underscored the importance of independent decision-making by the assessing authority. Citing previous judgments, the Court reiterated that the assessing officer must carefully scrutinize materials and assess tax payable without being swayed by superior officers' directions. In light of these principles and the petitioner's willingness to deposit the tax amount, the Court set aside the impugned orders and remanded the cases back to the 1st respondent for fresh orders. The Court directed the petitioner to deposit the tax amount in installments as specified.

5. Conclusion:
In conclusion, the Writ Petitions were allowed, and no costs were imposed. The matters were remanded back to the 1st respondent for fresh orders, with specific instructions regarding the deposit of the demanded tax amount by the petitioner. The connected Miscellaneous Petitions were closed as a result of the judgment.

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