2018 (11) TMI 1875 - HC - VAT and Sales Tax

Reopening of concluded assessment - short submission of petitioner is that this communication cannot be called as a SCN in terms of the proviso to Section 27(2) of TNVAT Act - HELD THAT - Any show cause notice should be precise in the formulation of its tentative conclusions. In this case, the said communication dated 12.12.2017 called upon the petitioner to make available a set of documents. Therefore such a communication can only be characterized as a notice in terms of Section 63 of the TNVAT Act. Any Assessing Authority is empowered to call upon the assessee to produce the accounts and other relevant documents - It is true that the petitioner was given an opportunity of personal hearing on 18.12.2017. But then, such an personal hearing will have to be granted after issuing a show cause notice. It is concluded that the communication dated 12.12.2017 is not a show cause notice at all. It is only a communication under Section 63 of the Act. The order impugned will have to be set aside on the short ground that the show cause notice as contemplated under Section 27(2) of the Act, was not issued. Therefore, the order impugned in this writ petition is set aside - matter is remitted to the file of the respondent who shall issue a proper show cause notice and after affording an opportunity of personal hearing to the petitioner herein pass order in accordance with law. Petition allowed by way of remand.

Summary

Issues:
Challenge to impugned order under Section 27(1) of TNVAT Act, 2006 for assessment year 2011-2012; Validity of notice issued by respondent for furnishing documents; Characterization of communication as a show cause notice under Section 27(2) of TNVAT Act; Discrepancy in proposed and levied tax rates; Errors in impugned proceedings.

Analysis:
The petitioner, an EPC contractor, contested the impugned order dated 27.02.2018 issued by the respondent under Section 27(1) of TNVAT Act, 2006 for the assessment year 2011-2012. The petitioner had been filing monthly returns, and the assessment was concluded on a deemed assessment basis under Section 22 of the Act. However, the assessment was sought to be reopened under Section 27, leading to the issuance of notices and subsequent passing of the impugned order.

The petitioner's counsel argued that the notice dated 12.12.2017, requesting various documents, did not meet the criteria of a show cause notice under Section 27(2) of the TNVAT Act. The communication was deemed as a notice under Section 63 of the Act, empowering the Assessing Authority to request relevant documents for verification purposes. Despite a personal hearing granted on 18.12.2017, it was emphasized that such a hearing should follow a proper show cause notice, which was lacking in this case.

Moreover, the petitioner highlighted discrepancies in the tax rates proposed in pre-assessment notices (5%) compared to the tax levied in the impugned order (14.5%). This inconsistency, along with other errors in the proceedings, was pointed out by the petitioner's counsel, leading to the conclusion that the impugned order lacked a valid show cause notice as required by Section 27(2) of the Act.

Consequently, the Court held that the impugned order must be set aside due to the absence of a proper show cause notice. The matter was remitted to the respondent for issuing a valid show cause notice and conducting proceedings in accordance with the law. As a result, the writ petition was allowed without costs, and the connected miscellaneous petition was closed.