2017 (7) TMI 314 - HC - VAT and Sales Tax

Principles of natural justice - The primary ground on which the petitioner has challenged the impugned order is by contending that an opportunity of personal hearing was not granted as required to be granted under section 27 of the TNVAT Act - Held that - Considering the complexity of the transaction and the large turnover involved, this Court is of the view that the respondent Assessing Officer should have afforded an opportunity of personal hearing, especially when the present assessment order is pursuant to the revised notice issued by him dated 14.12.2016 - When the fact remains that the earlier officer while issuing his notice dated 26.08.2016 in no uncertain terms stated that the records filed by the petitioner are sufficient to hold that the goods have been actually exported outside the Country and granted exemption claim on direct export sales for the entire amount claimed by the petitioner. The matter requires to be remanded for fresh consideration on this aspect as well as with regard to the defective C Forms which according to the respondent is not acceptable - appeal allowed by way of remand.

Summary

Issues: Challenge to assessment order under CST Act for the year 2012-13 based on lack of personal hearing and absence of inquiry.

Analysis:
The petitioner, a registered dealer under TNVAT Act and CST Act, contested an assessment order under the CST Act for the year 2012-13. The primary contention was the lack of a personal hearing as mandated by section 27 of the TNVAT Act and the absence of an inquiry before passing the impugned order. The petitioner claimed exemption under section 5(1) of the CST Act for exporting goods worth a significant amount and provided supporting documents. Initially, the Assessing Officer accepted these documents and granted the exemption. However, a revised notice was issued by a new Assessing Officer raising concerns about missing vital documents for the claimed turnover, leading to a proposal to disallow the exemption and assess at a higher tax rate. The petitioner objected to this and requested a personal hearing, which was not granted before the impugned order was passed.

The High Court observed that the complexity and substantial turnover involved warranted a personal hearing, especially considering the previous officer's acceptance of the documents. The Court concluded that the matter needed to be remanded for fresh consideration, particularly regarding the exemption claim on direct export sales and the defective C Forms. The Court directed the respondent to provide a personal hearing within 15 days, review the documents, and re-assess the exemption claim. Additionally, the respondent was instructed to return the defective C Forms for rectification and re-submission. The petitioner was granted reasonable time to collect and submit the necessary C Forms for sales not covered initially.

In summary, the Writ Petition was partly allowed, setting aside the disallowed exemption claim and remanding the matter for fresh consideration with specific directions for personal hearing and rectification of C Forms. The Court emphasized the importance of procedural fairness and compliance with statutory requirements in tax assessments, ensuring a thorough review of documents and opportunities for the petitioner to present their case effectively.