2016 (12) TMI 131 - HC - VAT and Sales Tax

Validity of order of assessment - TNVAT Act, 2006 - petitioner was not given sufficient time to respond to the pre-assessment notice, as only three days was granted - principles of natural justice - Held that - this Court is of the view that sufficient time should have been granted to the dealer to produce the documents and contest the proposal. According three days time, in the considered opinion of this Court, is inadequate and hence for that reason, this Court is inclined to interfere with the impugned order in respect of the above heads, as well as the consequential penalty which has been levied in the impugned order - Writ Petition is partly allowed, the impugned order in so far as it pertain to Sl.Nos. (1),(4) (5) & (6) viz. Reversal of ITC due, Tax Due on Sales return, Interest, tax Due on Sales suppression and penalty under section 27(3) and 27(4) of the Act are set aside and the matter is remanded to the respondent for fresh consideration and the petitioner is granted fifteen days time from the date of receipt of a copy of this order to submit relevant documents and on receipt of the documents and objections, the respondent shall afford an opportunity of personal hearing and redo the assessment in accordance with law. Petition allowed by way of remand.

Summary

Issues Involved: Challenge to assessment order under TNVAT Act for the year 2014-15 based on violation of principles of natural justice due to insufficient response time granted in pre-assessment notice.

Analysis:
1. Insufficient Time Granted for Response: The petitioner, a registered dealer under TNVAT Act, challenged the assessment order for the year 2014-15, primarily on the grounds of insufficient time granted to respond to the pre-assessment notice. The petitioner received a pre-assessment notice proposing revisions to total and taxable turnover, including excess claim of ITC, sales suppression, and depreciation. The notice was issued on 26.02.2016, with only three days granted for response. Subsequently, revised notices were issued, but the petitioner contended that the short response time hindered their ability to present necessary documents and substantiate their case adequately.

2. Assessment Order and Disputed Amounts: The assessment order computed various amounts due, including reversal of ITC, tax on sales return, interest, and penalty under relevant sections of the TNVAT Act. The petitioner disputed the order concerning specific items while admitting liability for others. The court reviewed the findings related to reversal of ITC and confirmed the order only in that regard. However, concerning other disputed items, the court noted that the petitioner should have been granted sufficient time to produce documents and contest the proposals. The court deemed three days as inadequate and decided to intervene in the order concerning the disputed heads and the consequential penalties imposed.

3. Court's Decision and Remand: The High Court partially allowed the Writ Petition, setting aside the impugned order regarding specific items such as reversal of ITC due, tax due on sales return, interest, tax due on sales suppression, and penalties under relevant sections of the Act. The matter was remanded to the respondent for fresh consideration, granting the petitioner fifteen days to submit relevant documents. The respondent was directed to provide an opportunity for a personal hearing and redo the assessment in accordance with the law for the mentioned heads. The court concluded by stating that no costs were to be incurred, and the connected Miscellaneous Petition was closed.