2015 (3) TMI 300 - HC - VAT and Sales Tax

Non filing of returns - Intention to evade tax - Non compliance with Section 22(4) and Section 81 of the Tamil Nadu Value Added Tax, 2006 by the Revenue - Held that - Prior to the introduction of the Act 2006 with effect from 2007, this Court had considered a similar issue with regard to Tamil Nadu General Sales Tax Act in the case of T.M.RAJAGANAPATHI TRADERS VS. 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 in the above cited decision has 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 respondent 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. - while setting aside the order impugned in this writ petition, I direct the respondent to comply with Section 81 of the 2006 Act in its letter and spirit and before passing final order afresh on merits, an opportunity of hearing is mandatory besides asking the petitioner to file objections, if any - Decided in favour of assessee.

Summary

Issues: Challenge to assessment order under Tamil Nadu Value Added Tax Act, 2006; Failure to file returns and pay tax; Cross-examination rights of the dealer.

Analysis:
1. Challenge to Assessment Order: The petitioner challenged the assessment order dated 2.1.2015 passed by the respondent under the Tamil Nadu Value Added Tax Act, 2006. The respondent assessed the petitioner under Section 22(4) of the Act for failure to submit returns. The petitioner contended that the notice issued was based on website details and requested copies of invoices and an opportunity to cross-examine sellers, which was not provided adequately in the impugned order.

2. Failure to File Returns and Pay Tax: The respondent contended that the petitioner failed to file monthly returns as required under Section 21 of the TN VAT Act, 2006, leading to an estimation of deemed sale value and proposed assessment. The respondent alleged that the petitioner intentionally evaded tax payment and did not provide necessary purchase details. The assessment order proposed penalties and determined turnover under Section 22(4) of the Act.

3. Cross-Examination Rights of the Dealer: The petitioner argued that under Section 81 of the 2006 Act, they were entitled to cross-examine persons and requested a fair hearing. The court referred to a previous decision under the Tamil Nadu General Sales Tax Act, emphasizing the importance of cross-examination rights for the aggrieved party. The court directed the respondent to comply with Section 81, provide a hearing, and pass final orders within four months, ensuring a fair opportunity for the petitioner to file objections.

In conclusion, the High Court of Madras set aside the impugned order, emphasizing the importance of procedural fairness, cross-examination rights, and compliance with statutory provisions. The court directed the respondent to conduct proceedings diligently, allowing the petitioner a fair opportunity to present their case and file objections before a final order is passed.