2015 (5) TMI 412 - HC - VAT and Sales Tax

Validity of assessment of order - Petitioner has not been afforded adequate opportunity to put forth their submissions stating that the proposal to reverse the ITC availed is incorrect - held that - petitioner had stated that the proposal to reverse the ITC has been made without taking into consideration of adjustment of ITC towards future demands and that they wanted 30 days' time since they were collecting the details of adjustment of ITC. Therefore, the first respondent ought to have examined the issue in a more objective manner and should have taken note of the fact that opportunity to the Assessee should be a meaningful opportunity and it is not for the sake of mere satisfying or compliance of the statutory requirement. That apart, when the petitioner made a request for grant of 30 days' time, if the authority was not inclined to accept the request, then a separate order ought to have been passed prior to finalizing the assessment. Even in such a case, the Assessee should have been afforded an opportunity of personal hearing. Since all these above procedural illegalities have crept in, the impugned orders are liable to be quashed. - Decided in favour of assessee.

Summary

Issues:
Challenge to assessment orders under Tamil Nadu Value Added Tax Act for assessment years 2009-10 to 2012-13 based on lack of adequate opportunity for submissions.

Analysis:
The petitioner, a registered dealer under the TNVAT Act and Central Sales Act, challenged assessment orders for multiple years citing insufficient opportunity to contest the proposal to reverse Input Tax Credit (ITC). The petitioner argued that Section 27(2) of the TNVAT Act mandates a "reasonable opportunity" for submissions, emphasizing that this should be a meaningful chance for the dealer to present their case. The petitioner requested 30 days to provide detailed objections, highlighting the need for time to gather information on ITC adjustments. However, the first respondent proceeded with passing the assessment orders on the same day the adjournment request was made.

The court observed that while authorities have the discretion to accept or reject adjournment requests, they must adhere to the statutory requirement of providing a "reasonable opportunity" to the dealer as specified in Section 27(2) of the TNVAT Act. The court emphasized that the opportunity granted should be meaningful and not merely a procedural formality. In this case, the petitioner's request for time to gather information on ITC adjustments warranted a more objective consideration from the first respondent. The court noted that if the authority intended to reject the adjournment request, a separate order should have been issued before finalizing the assessment, ensuring the dealer's right to a personal hearing. As these procedural irregularities were evident, the court deemed the assessment orders as illegal and ordered their quashing.

Consequently, the writ petitions were allowed, and the impugned orders were set aside. The petitioner was directed to submit objections within 15 days, supported by relevant documents. The first respondent was instructed to provide a personal hearing to the petitioner and issue a reasoned order within 30 days post the conclusion of the hearing. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.