2019 (1) TMI 1557 - HC - VAT and Sales Tax

Principles of Natural Justice - It is the specific case of the petitioner that the order of assessment has been passed by the second respondent without considering the schedule to the Act and no proper reasoning adduced for arriving the taxability in respect of the transaction of the petitioner - HELD THAT - The submission is not refuted by the learned Government Advocate appearing for the respondents, who fairly submitted that the matter be remanded for fresh consideration in line with the Schedule to the Act - the matter is remitted to the first respondent for passing appropriate orders, independently applying the Schedule to the Tamil Nadu General Sales Tax Act, 1959, after affording due opportunity of hearing to the petitioner. Petition allowed by way of remand.

Summary

Issues:
1. Interpretation of taxability of cotton seeds under the Tamil Nadu General Sales Tax Act, 1959.
2. Validity of the order dated 26.09.2005 and the consequential assessment order dated 11.12.2006.
3. Compliance with principles of natural justice in the assessment process.

Analysis:
1. The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, 1959, deals with certified seeds for sowing purpose. The seeds undergo testing and treatment before being sold. The assessing authority proposed to assess the cotton seeds sold by the petitioner as cotton oil seed at 4%, leading to objections by the petitioner.

2. The Tamil Nadu Seed Association sought clarification on the tax rate for cotton seeds used for seeding purpose and requested exemption under item 19, Part-B of the Third Schedule to the Act. However, the first respondent refused the representation, leading to confusion. The petitioner challenged this refusal and the subsequent assessment order treating the goods as oil seeds.

3. The petitioner contended that the orders passed were violative of natural justice, lacked jurisdiction, and were contrary to the statutory entry in the Third Schedule. The Court observed that the assessment order was passed without proper reasoning and directed a fresh consideration in line with the Schedule, acknowledging the need for due opportunity of hearing.

4. The Court set aside the order dated 26.09.2005 and the assessment order dated 11.12.2006, remitting the matter to the first respondent for reevaluation. The first respondent was instructed to pass appropriate orders independently, considering the Schedule to the Act, and providing a hearing to the petitioner within six weeks from the date of the order.

5. The writ petition was allowed with no costs, and the connected miscellaneous petition was closed. The judgment emphasized the importance of adhering to procedural fairness and statutory provisions in tax assessments, ensuring a transparent and just process for all parties involved.