2016 (11) TMI 807 - HC - VAT and Sales Tax

Failure to file objections in response to notice - request for one more opportunity of being heard - Held that - the assessment order has been made only on surmises and conjunctures and not based on the books of accounts and the penalty is also levied more than 150% of the tax component. Therefore, in the interest of justice, we are of the view that the petitioner has to be given one more opportunity to produce the accounts before the assessing officer so as to have a fair deal in the framing of assessment. Impugned order set aside - matter remitted back to the respondent and the respondent is directed to conduct a detailed enquiry by summoning the sellers and to grant an opportunity to cross examine the sellers for establishing that the petitioner had not effected such purchases. The said exercise will be completed within a period of three months - petition allowed - decided in favor of petitioner.

Summary

Issues:
Petitioner seeks Writ of Certiorarified Mandamus to quash respondent's records and conduct detailed enquiry.

Analysis:
The petitioner, a dealer in Timber and Hardware items under Tamil Nadu Value Added Tax Act 2006, filed annual returns for various assessment years. The respondent accepted the returns without raising any tax liability. However, during an inspection, Enforcement Wing Officers alleged that the petitioner had suppressed taxable purchases, estimating sales and tax liabilities. The respondent issued notices estimating tax dues and penalties, leading to an impugned order on 12.08.2016 based on a surprise inspection conducted earlier. The petitioner claimed they were not given a fair opportunity to respond and requested to file objections and conduct an enquiry, citing a relevant judgment. The court considered the petitioner's arguments and set aside the impugned order, remitting the matter back to the respondent for a detailed enquiry, including cross-examination of sellers within three months.

This judgment highlights the importance of providing a fair opportunity for parties to respond in tax assessment cases and emphasizes the need for a thorough investigation before imposing tax liabilities and penalties. The court's decision to remit the matter back to the respondent for a detailed enquiry underscores the principle of natural justice and the right to be heard in matters affecting one's tax liabilities. The reference to a previous judgment in a similar context showcases the legal precedent and the application of established principles in tax assessment disputes. Overall, the judgment reflects a balanced approach to resolving disputes related to tax assessments, ensuring procedural fairness and a thorough examination of the facts before reaching a final decision.