2015 (5) TMI 251 - HC - VAT and Sales Tax

Challenge to the orders of assessment - Increase in rate of tax - Held that - On a perusal of the impugned assessment order dated 31.07.2014 for the Assessment Year 2011-12, it is seen that there is no reference to any show cause notice issued to the petitioner and the only reference is the order of original assessment dated 07.10.2013. If the authority had issued a show cause notice, the same should have find place in the reference column and that should also be in the reference of the body of the assessment order as to whether the notice was served on the Dealer and whether the Dealer has submitted his objection and such other things, these basic requirements are necessary while passing the impugned order dated 31.07.2014. Therefore, the impugned order is held to be illegal. So far as the impugned order relating to the assessment year 2010-11, it is a original assessment. The petitioner had filed monthly return in Form I for the said year and reported a total taxable turnover of ₹ 73,11,750/- and ₹ 19,77,050/- and they have remitted tax at the rate of 4% on Direct Sales. However, while making the assessment, the respondent has assessed the dealer at 12.5%. It is alleged in the impugned order that the Concessional Tax Rate at 4% is not applicable and the goods are taxable at 12.5%. However, this enhancement of the rate of tax has been done without notice to the petitioner. Therefore, the impugned order of assessment dated 31.07.2014 for the assessment year 2010-11 is in violation of principles of natural justice. Accordingly, the same is also held to be bad in law. - Decided in favour of assessee.

Summary

Issues:
Challenging assessment orders under Central Sales Tax Act for two different assessment years.

Analysis:
The petitioner, a registered dealer under Central Sales Tax Act and Tamil Nadu Value Added Tax Act, challenged assessment orders dated 31.07.2014 for two different assessment years. For the Assessment Year 2011-12, the petitioner objected to an increase in the tax rate without receiving a show cause notice. The court noted that the impugned order lacked any reference to a show cause notice, rendering it illegal due to the absence of basic procedural requirements. Similarly, for the Assessment Year 2010-11, the petitioner was assessed at a higher tax rate without prior notice, violating principles of natural justice. Consequently, both assessment orders were deemed unlawful.

The court directed the respondent to issue show cause notices to the petitioner for both assessment years, allowing the petitioner to submit objections and providing an opportunity for a personal hearing. The orders were to be passed on merits and in accordance with the law promptly. The writ petitions were allowed, and the impugned orders were quashed. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.