2016 (10) TMI 145 - HC - VAT and Sales Tax

Opportunity of personal hearing - reversal of the process loss - reversal of the alleged stock transfer - validity of assessment - TNVAT Act, 2006 - jewellery of gold, silver and other special metal - inspection by Enforcement Wing in the premises of petitioner - Held that - the decision in the case of M/s. Interfit Techno Products Ltd. Versus The Principal Secretary/Commissioner of Commercial Taxes, The Assistant Commissioner (CT) (FAC) 2015 (4) TMI 935 - MADRAS HIGH COURT relied upon. It was pointed out that whether a loss was an invisible loss or whether it was a destructive loss or whether it would fall within any one of the parameters specified in sub-section 9 to section 19, all being questions of fact, have to be established by the dealer when called upon by the authority. However, to decide the question, first of all the respondent should have called upon the dealer to explain their process and furnish all their books of accounts. Thus, the assessment proceedings having been made in a very summary manner, the same calls for interference. The impugned assessment orders made in a very summary manner without affording reasonable opportunity to the petitioner to put forth their submission and explain the nature of transactions - matters remanded to the respondent to re-do the assessment afresh after affording an opportunity of personal hearing, calling for further details, examining the books of accounts and records placed by them and thereafter, pass a speaking order on merits - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Violation of principles of natural justice in impugned orders related to Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act).
2. Reversal of input tax credit based on process loss and alleged stock transfer without proper dialogue and discussion.
3. Summary assessment without affording reasonable opportunity for personal hearing and submission in assessment years 2010-2011 and 2011-2012.

Analysis:
1. The judgment addresses the violation of principles of natural justice in the impugned orders under the TNVAT Act. The court segregated the writ petitions into two groups based on assessment years. The petitioner, a Private Limited Company, challenged the impugned orders on grounds of natural justice. The court examined the validity and propriety of the orders, emphasizing the importance of assessing if there was a breach of natural justice principles.

2. Regarding the reversal of input tax credit, the court highlighted issues related to process loss and alleged stock transfer. The assessment was criticized for being finalized without proper dialogue and discussion with the petitioner. The court noted discrepancies in the assessment process, especially in determining process loss. It referred to a previous case to emphasize the need for a detailed examination of process loss and the inappropriateness of adopting an ad-hoc percentage. The court found the assessment lacking in proper scrutiny and directed a re-assessment.

3. In the assessment years 2010-2011 and 2011-2012, the court found similar deficiencies in the assessment process. The petitioner was not afforded a personal hearing or given the opportunity to reconcile details before the impugned orders were passed. The court concluded that these assessments were done summarily without allowing the petitioner to present their submissions adequately. As a result, the court set aside the impugned orders and remanded the matters to the respondent for a fresh assessment, emphasizing the need for a thorough review, personal hearing, and compliance with legal procedures.

This detailed analysis of the judgment highlights the issues of natural justice violation, improper assessment procedures, and the court's directives for a fair and comprehensive reassessment process under the TNVAT Act.