2018 (4) TMI 1913 - HC - VAT and Sales Tax

Violation of principles of natural justice - Validity of assessment order - alleged purchase omission - reversal of ITC claimed for the discount received for the relevant assessment years - levy penalty under Section 27(3) of TNVAT Act - HELD THAT - The petitioner has not accepted the allegations made by the Enforcement Wing Officials. Therefore, the Assessing Officer has committed serious error in stating that the petitioner themselves have admitted the discrepancies. This would be sufficient, even to the set aside the show cause notice. However, the fact remains that the petitioner submitted their objections and requested for personal hearing so that, they could discuss with the Assessing Officer and then, produce necessary record to reconcile the alleged purchase omission. However, the Assessing Officer did not take note of the tone and tenor of the objections given by the petitioner, but, mechanically, stated that the details given by them were not exactly tallied. The Assessing Officer should have made an endeavour atleast to test the details of the transactions, which tally, and he ought not to have completed the assessment by making such vague averments. This Court is of the view that the impugned orders are completely flawed - the impugned orders are set aside and the matters are remanded to the respondent for fresh consideration, who shall first afford an opportunity of personal hearing to the petitioner, and if the petitioner requests for any details, the same shall be furnished, after which, further opportunity be granted and the assessment shall be redone in accordance with law and a speaking order should be passed - Petition allowed by way of remand.

Summary

Issues Involved:
Challenge to assessment orders under the Tamil Nadu Value Added Tax Act for multiple assessment years based on alleged violation of natural justice principles and failure to follow court directions. Two main issues include alleged purchase omission and reversal of Input Tax Credit (ITC) claimed for discount received, with a proposal for penalty under Section 27(3) of the Act.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner, a registered dealer under the TNVAT Act, challenged assessment orders for several years, alleging a violation of natural justice principles and failure to comply with court directions. The challenge was based on discrepancies noted during an inspection by Enforcement Wing Officials, where the petitioner disputed the allegations made by the officials. Despite the petitioner's objections and request for a personal hearing to reconcile the alleged purchase omission, the Assessing Officer did not adequately consider the objections and completed the assessment with vague averments. The court found that the Assessing Officer's approach was flawed, as he failed to test the transaction details properly before completing the assessment.

2. Issues Arising for Consideration:
Two main issues were identified for all assessment years: alleged purchase omission and reversal of ITC claimed for discounts received. Additionally, there was a proposal to levy a penalty under Section 27(3) of the Act. The revision notices issued were based on discrepancies noted during an inspection, where the petitioner disputed the allegations made by the Enforcement Wing Officials. The court noted that the petitioner's statement during inspection clearly indicated a disagreement with the allegations, which should have prompted a more thorough assessment process by the Assessing Officer.

3. Court Decision and Remand:
In light of the flawed assessment process and failure to adhere to principles of natural justice, the court allowed the Writ Petitions, set aside the impugned orders, and remanded the matters to the respondent for fresh consideration. The court directed the respondent to provide the petitioner with a personal hearing, furnish any requested details, and conduct the assessment in accordance with the law. The court emphasized the need for a speaking order to be passed after the reassessment. No costs were awarded, and the connected Writ Miscellaneous Petitions were closed as a result of the judgment.