2015 (4) TMI 390 - HC - VAT and Sales Tax

Violation of principles of natural justice - levy of penalty at the rate of 150% under Section 27(3) of the TNVAT Act, for the alleged wrong claim of ITC and alleged payment of tax lesser than the tax due - opportunity of personal hearing to the petitioner not granted - Held that - in a case where the question involved was one of determination of certain factual disputes which were a bit complex and not free from controversy, the Principles of fairness would encompass personal hearing within the concept of reasonable opportunity to show cause under Section 16(1)(a) of the Act. Further Section 16(1)(a) of the Act had to be construed in accordance with the circular dated April 20, 2001 providing for oral hearing where the dealer demanded it by way of contemporanea expositio. Therefore, the order passed by way of revision of assessment without giving the petitioner an opportunity of personal hearing was liable to be quashed. - opportunity of personal hearing ought to have been afforded to the petitioner/dealer before finalizing the proposal in the notices dated 31.10.2012 and 02.11.2012. Since personal hearing was not afforded to the petitioner despite request made by the petitioner, this Court is constrained to hold that there is a violation of principles of natural justice, hence, on this ground alone, the petitioner is entitled to succeed. - Following decision of SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai and another, reported in 2008 (9) TMI 914 - MADRAS HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Challenging assessment orders for Assessment Years 2005-06 and 2007-08 based on violation of natural justice principles.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged assessment orders for the mentioned years. The petitioner contended that they were not granted a personal hearing despite requesting one, leading to a violation of natural justice principles. The assessment was proposed to be revised based on defects noticed during inspections, with penalties proposed for alleged incorrect claims. The petitioner objected to the proposed revision, requesting an opportunity to be heard before any order was passed.

The respondent overruled the objections without affording a personal hearing to the petitioner, prompting the filing of writ petitions. The respondent, in the counter affidavit, did not deny the lack of personal hearing but stated that orders were passed after verifying the objections raised by the petitioner.

Citing a previous Division Bench decision, the court emphasized the importance of personal hearing in cases involving complex factual disputes. The court held that the failure to provide a personal hearing before finalizing the proposed revisions amounted to a violation of natural justice principles, entitling the petitioner to succeed. Consequently, the court allowed the writ petitions, quashed the impugned orders, and remitted the matters to the respondent for fresh consideration with a directive to afford the petitioner a personal hearing to present supporting records and documents. The court clarified that its intervention was solely based on the violation of natural justice principles, leaving the merits of the case to be decided by the respondent in accordance with the law.

In conclusion, the court's decision focused on upholding principles of natural justice by emphasizing the necessity of providing a personal hearing to the petitioner before finalizing assessment revisions. The judgment highlights the significance of procedural fairness in administrative actions, underscoring the importance of affording parties the opportunity to be heard before decisions impacting their rights are made.