2016 (9) TMI 1160 - HC - VAT and Sales Tax

Revision of assessment - inspection of the place of business by the Enforcement Wing Officials of the Commercial Taxes Department - Tamil Nadu Value Added Tax 2006 - hosiery garments - local sales of cloth and inter-State sale of garments with stitching charges sale ratio of garments - hosiery garments sales within the State are camouflaged as cloth sales - entire cloth sale disallowed and treated as hosiery garment sales - notice issued by Assessing officer without applying his mind and solely on report given by Enforcement wing officials - whether the notice issued by Assessing officers are correct and will bound the petitioner keeping in view the fact that Assessing Officer did not apply his mind while issuing the pre-revision notices and mechanically issued notices by verbatim repeating the allegations made against the petitioner by the Enforcement Wing Officials? Held that - the decision in the case of Madras Granites P. Ltd. Vs. CTO Arisipalayam Circle 2002 (10) TMI 767 - MADRAS HIGH COURT is relied upon. It was held that by merely endorsing the findings of the Inspecting Authorities and implementing in-toto the Assessment Proceedings which were issued without independent thinking by the authority are condemnable. The notice issued by the Assessing Officers dated 10.05.2016 itself is defective and it is an outcome of total non-application of mind as it is a verbatim repetition of the observations of the Enforcement Wing Officials. This is clear because while recording the statement from the petitioner the view of the Inspecting Officers has also been recorded in the statement dated 25.01.2016. - writ petition allowed - it is kept open for the Assessing Officer to pass orders of assessment afresh in accordance with law after giving an opportunity of personal hearing to the petitioner - decided in favor of petitioner.

Summary

Issues:
Challenging revision of assessments under TNVAT Act and CST Act based on Enforcement Wing Officials' report without proper evidence or comparative statements. Allegations of camouflaging hosiery garment sales as cloth sales. Lack of independent assessment by the Assessing Officer. Legality of pre-revision notices and impugned assessment orders.

Analysis:

The petitioner, a hosiery garment manufacturer and dealer registered under TNVAT Act and CST Act, faced revision of assessments for multiple years based on an Enforcement Wing Officials' report. The report alleged camouflaging hosiery garment sales as cloth sales without substantial evidence. The petitioner disputed these claims, stating they were vague and lacked supporting details for the proposed tax reworking. The Assessing Officer issued pre-revision notices echoing the Enforcement Wing Officials' allegations verbatim, indicating a lack of independent assessment.

The petitioner, upon receiving the notices, submitted objections highlighting the Assessing Officer's failure to consider their objections and the need for a fresh assessment notice. The impugned assessment orders confirmed the proposals without addressing the petitioner's objections adequately, showcasing a lack of proper assessment procedure. The court criticized the Assessing Officer's mechanical approach and failure to apply the Rule of Law, emphasizing the necessity for independent assessment in accordance with legal principles.

The court referenced a previous judgment emphasizing the Assessing Officer's duty to independently assess without being bound by higher authorities' directions. It deemed the pre-revision notices and subsequent assessment orders as illegal due to the Assessing Officer's failure to apply independent judgment. Consequently, the court set aside the impugned assessment orders and pre-revision notices, allowing the Assessing Officer to conduct fresh assessments after affording the petitioner a personal hearing.

In conclusion, the court found the entire revision process and assessment orders to be unlawful and directed a fresh assessment in compliance with legal standards. The judgment highlighted the importance of independent assessment by the Assessing Officer and the need to follow due process in tax revision proceedings under the TNVAT Act and CST Act.