2016 (12) TMI 818 - HC - VAT and Sales Tax

Validity of assessment orders - assessment made in spite of presence of documentary evidence - Held that - it would be relevant to take note of the observations of this Court in the case of Dharani Sugars and Chemicals vs. Assistant Commissioner (CT) 2014 (12) TMI 1218 - MADRAS HIGH COURT where it was held that if the assessing officer was of the view that the documents were not adequate to establish their claim then fairness demands that the petitioner/dealer should have been issued a notice in this regard information should have been called for they should have been directed to appear in person and produce all records. However the assessing officer appears to have drawn an adverse inference while passing the assessing order which is contrary to law. - matter remanded back.

Summary

Issues:
1. Failure to produce documentary evidence leading to assessment orders.
2. Delay in passing assessment orders.
3. Challenge to assessment orders under the Tamil Nadu Value Added Tax Act, 2006.
4. Rejection of objections based on lack of documentary evidence.
5. Violation of principles of natural justice by the assessing officer.

Analysis:

1. The High Court considered the case where the petitioner failed to produce documentary evidence, leading to the assessment orders being passed. The pre-assessment notices were issued following a surprise inspection, and the petitioner's objections were acknowledged. However, the assessment orders were passed nearly a year later, citing the petitioner's failure to produce documents.

2. The Court noted that the assessment orders for the years 2012-13 to 14-15 were challenged under the Tamil Nadu Value Added Tax Act, 2006. Initially, the pre-assessment notices contained seven proposals, including a penalty. The petitioner's objections led to three proposals being dropped, but the remaining four were confirmed and challenged.

3. Upon reviewing the impugned assessment orders, the Court found that the rejection of the petitioner's objections was solely based on the lack of documentary evidence, such as sale bill copies, vouchers, and receipts. The Court emphasized that the assessing officer should have directed the petitioner to appear in person and produce the necessary documents instead of drawing adverse inferences.

4. Referring to a previous case, the Court highlighted the importance of fairness in the assessing officer's approach. It was emphasized that if the documents produced were deemed inadequate, the dealer should have been issued a notice to produce further evidence. Drawing adverse inferences without following due process was considered a violation of principles of natural justice.

5. Consequently, the Court allowed the writ petitions, setting aside the impugned orders. The matter was remanded to the respondent for fresh consideration, granting the petitioner two weeks to produce all required documents. The respondent was instructed to re-do the assessments in accordance with the law after affording the petitioner an opportunity for a personal hearing. No costs were awarded in this judgment.