2022 (2) TMI 1430 - HC - VAT and Sales Tax

Requirement of pre-deposit for quashing of assessment under section 27(1) of the TNVAT Act, 2006 - mismatch between the value of works contract furnished in Form S and the monthly returns filed in Form 1 - main grievance of the appellant is that when the assessment order is unsustainable and quashed for want of reconsideration, the learned Judge ought not to have directed the appellant to deposit 30% of the disputed tax due as a condition precedent for the same. HELD THAT - This court is of the view that the issue involved herein is no longer res integra. A Division Bench of this court in HAVEA HANDLES COMPONENTS PVT. LTD. NOW KNOWN AS HAVEA FURNITURE INTERIORS PVT. LTD. REPRESENTED BY ITS DIRECTOR VERSUS THE ASSISTANT COMMISSIONER (CT) (FAC) ROYAPETTAH II ASSESSMENT CIRCLE CHENNAI 2014 (7) TMI 1367 - MADRAS HIGH COURT considered the similar issue and held once it has been found that the orders impugned in the writ petitions are unsustainable on account of violation of principles of natural justice, it is wholly unnecessary to impose any condition while remitting the matter for fresh adjudication and in the considered opinion of this court, the direction given to the appellant / writ petitioner to deposit 10% of the tax amount as claimed in the demand notice, as a condition precedent to enquire into the matter, is unsustainable and the said portion of the order is liable to be set aside. Having regard to the admitted fact that the learned Judge set aside the assessment order and remanded the matter to the respondent for fresh consideration, this court is of the opinion that the pre-condition imposed on the appellant to deposit 30% of the tax amount for consideration of the matter afresh by the respondent, is certainly unwarranted and hence, the same is deleted. Appeal disposed off.

Summary

Issues:
1. Appellant challenging assessment order without reasonable opportunity.
2. Appellant directed to deposit 30% of disputed tax.
3. Appellant's contention of already paying the tax.
4. Respondent passing assessment order without replies to show cause notices.
5. Appellant's appeal allowed by learned Judge.
6. Dispute regarding pre-deposit requirement.
7. Interpretation of legal precedent regarding pre-deposit conditions.

Analysis:
1. The appellant, a works contractor, challenged an assessment order for the year 2014-15 due to a mismatch in declared values. The appellant argued they were not given a reasonable opportunity to be heard before the assessment order was passed, claiming it violated principles of natural justice.

2. The learned Judge directed the appellant to deposit 30% of the disputed tax as a condition for quashing the assessment order. The appellant contested this requirement, stating they had already paid the tax due for the works contract during the relevant assessment year.

3. The respondent, represented by the Government Advocate (Taxes), defended the assessment order, stating the appellant failed to reply to show cause notices, leading to the order being confirmed. The respondent supported the pre-deposit condition imposed by the learned Judge to protect revenue interests.

4. The High Court considered the appellant's grievance and legal precedent. Referring to a previous Division Bench judgment, the Court held that imposing a deposit condition when an order is quashed for reconsideration is unnecessary. Therefore, the Court deemed the 30% pre-deposit requirement unwarranted and deleted it.

5. Consequently, the Court modified the order, directing the appellant to respond to the show cause notices within two weeks. The respondent was instructed to reconsider the matter and pass appropriate orders after providing a personal hearing to the appellant within 30 days.

6. The judgment allowed the appeal, disposing of the writ petition without costs and closing the connected miscellaneous petition. The Court's decision focused on ensuring fairness in the assessment process and upholding principles of natural justice while considering revenue interests.