2016 (12) TMI 423 - HC - VAT and Sales Tax

Jurisdiction of the act - since petitioner is selling timber under Section 5(2) of the CST Act 56, they are not liable for taxation under the TNVAT Act and the petitioner also sells the timber locally taxable @ 14.5% under the said provision - Held that - in the light of the circular coupled with the fact the order came to be passed without furnishing the copy of the web-report, this Court is of the considered view that the appellant/ petitioner need not avail alternative remedy. The third respondent has placed reliance upon the web- report, but, without furnishing a copy of the same to the appellant/petitioner and arrived at the decision and passed the impugned order and therefore, on this short ground, the impugned order which was the subject matter of the Writ Petition warrants interference. Writ Petition allowed and the order dated 30.09.2015 passed by the third respondent as well as the order passed by the learned Judge in W.P(MD).No.22745 of 2015 are set aside and the matter is once again remanded to the third respondent who shall follow the above cited statutory provisions as well as the Circular and pass appropriate orders.

Summary

Issues involved: Challenge to assessment order under the Tamil Nadu Value Added Tax Act, 2006; Allegation of non-furnishing of web-report copy affecting assessment; Interpretation of statutory provisions and circulars for revision of assessment; Availability of alternative remedy.

Analysis:

The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, challenged an assessment order dated 30.09.2015 through a Writ Petition which was dismissed, leading to the current appeal. The petitioner, an importer of timber, claimed exemption from taxation under the Act for selling timber under Section 5(2) of the CST Act 56, while also selling timber locally taxable at 14.5%. Despite the petitioner's compliance with filing returns and tax payment, the third respondent issued a pre-assessment notice proposing a higher taxable turnover and penalty under Section 22(5) of the TNVAT Act. The petitioner's representation was not considered, leading to the impugned assessment order.

The appellant's counsel argued that reliance on an alleged web-report for the turnover amount without furnishing a copy violated procedural fairness. Citing a Division Bench judgment, the counsel emphasized the need for a reasonable opportunity of hearing before levying penalties as per the Act. On the other hand, the Government Advocate contended that the petitioner failed to avail the opportunity given, suggesting the availability of an alternative remedy.

The Court, after considering submissions and records, noted the non-furnishing of the web-report copy to the petitioner, contrary to statutory provisions and circular guidelines mandating opportunities for revision of assessment. Relying on Circular No.7/2014 and the procedural lapses, the Court found merit in the appellant's argument against the impugned order. Consequently, the Court allowed the Writ Petition, setting aside the assessment order and remanding the matter to the third respondent for reevaluation in compliance with statutory provisions and circular guidelines within three weeks.

In conclusion, the Court's decision highlighted the importance of procedural fairness in assessment procedures, emphasizing the need for adherence to statutory guidelines and providing opportunities for representation before passing orders. The judgment serves as a reminder of the legal requirements for tax assessments and the significance of due process in administrative decisions under tax laws.