2015 (5) TMI 207 - HC - VAT and Sales Tax

Penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 - Personal hearing not granted - Held that - On perusal of the show cause notice, dated 28.05.2014, it is evident that there was no proposal made for imposing penalty under Section 27(3) of the Act, therefore, such contention raised by the petitioner merits acceptance. So far as opportunity of personal hearing is concerned, Section 22(4) of TNVAT Act mandates that the dealer should have been heard personally, especially, in a case relating to revision of assessment. This has also not been followed by the respondent while passing the impugned order - The decision of the Honourable Division Bench of this Court in the case of V.Selladurai vs. Chief Commissioner of Income-Tax (OSD) and another, reported in 2007 (8) TMI 69 - HIGH COURT, MADRAS supports the stand taken by the petitioner, wherein, it has been held that when no personal hearing was granted to the Assessee, there was a clear violation of principles of natural justice. Hence, on the above ground, the impugned order calls for interference. - Decided in favour of assessee.

Summary

Issues:
Challenge to assessment order under TNVAT Act, 2006 for AY 2010-11 - Lack of personal hearing granted to the petitioner - Imposition of penalty without proposal in show cause notice.

Analysis:

1. The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, challenged the assessment order for the Assessment Year 2010-11, citing lack of personal hearing and imposition of penalty without a proposal in the show cause notice.

2. The petitioner's counsel argued that no personal hearing was granted and that the penalty of 150% imposed under Section 27(3) of the Act was not proposed in the show cause notice.

3. The High Court examined the show cause notice and found no proposal for imposing the penalty under Section 27(3) of the Act, thereby accepting the petitioner's contention on this ground. Additionally, the Court noted that Section 22(4) of the TNVAT Act mandates a personal hearing, especially in cases of assessment revision, which was not followed by the respondent.

4. Referring to a previous case, the Court highlighted the importance of granting a personal hearing, emphasizing the violation of principles of natural justice when such a hearing is denied to the Assessee.

5. Consequently, the High Court allowed the Writ Petition, quashed the impugned order, and remanded the matter to the respondent for fresh consideration. The respondent was directed to issue a fresh notice with a clear proposal within two weeks, allowing the petitioner to submit objections and ensuring a personal hearing before passing fresh orders in accordance with the law.

6. The judgment emphasized the importance of adhering to procedural fairness and principles of natural justice in administrative actions, particularly in matters of tax assessment, and underscored the necessity of providing an opportunity for a personal hearing to affected parties.