2017 (8) TMI 1020 - HC - VAT and Sales Tax

Penalty u/s 27(5)(ii) of the TNVAT Act - mis-declaration of value - it was alleged that the petitioner has not reported certain interstate sales in the monthly returns - the petitioner requested the respondent to wait till the adjudication under the Customs Act by the Customs Authority/DRI is completed. Further, the petitioner requested that fresh notice may be issued for each year after adjudication of the cases is over by the Customs Authority and also to give them an opportunity of personal hearing - Held that - the averments in the counter affidavit filed by the DRI in the bail petition nor the averments which are set out in the show cause notice issued by the DRI dated 22.06.2016, can ipso facto be the basis for demand of sales tax. It is well open to the respondent to rely upon such material based on information received from the DRI. What is required to be done is to conduct independent enquiry for which the petitioner should be given opportunity of personal hearing. This can be done only after the DRI completes the adjudication of the show cause notice dated 22.06.2016, as all documents are in the custody of the DRI. Therefore, the respondent has to necessarily await the adjudication of the case by the DRI or the Customs Officials with regard to the allegation of sales suppression/mis-declaration of value. The respondent is directed to furnish all the details in respect of the allegation of mismatch and allegation of interstate sales suppression culled out from the website - so far as the assessment made under the head mis-declaration of value dated 22.06.2016, is concerned subject to the out come of the show cause notice issued by DRI dated 22.06.2016, the respondent is at liberty to initiate proceedings under the TNVAT Act - petition allowed - decided in favor of petitioner.

Summary

Issues:
Assessment orders under Tamil Nadu Value Added Tax Act, 2006 for the years 2008-2009 to 2013-2014, involving three common issues: (i) mismatch in purchase details, (ii) alleged interstate sales suppression, and (iii) mis-declaration of value based on information from Directorate of Revenue Intelligence.

Analysis:
1. Mismatch in Purchase Details:
The petitioner requested details of dealers not reporting turnover, asserting innocence due to sellers filing returns. Respondent failed to provide details, violating natural justice. Court directed furnishing of details, granting 15 days for objections and personal hearing.

2. Alleged Interstate Sales Suppression:
Petitioner sought copy of check post extract to respond to sales suppression allegation. Respondent proceeded without furnishing details, violating natural justice. Court ordered furnishing of details, granting opportunity for objections and personal hearing.

3. Mis-declaration of Value:
Allegations based on DRI's show cause notice lacked independent enquiry by Commercial Taxes Department. Duty liability not finalized, making alleged sales suppression uncertain. Court held respondent must await DRI's adjudication before demanding sales tax, ensuring petitioner's right to personal hearing.

4. Conclusion and Directions:
Court partly allowed writ petitions, directing respondent to provide all details for mismatch and sales suppression allegations, granting time for objections and personal hearing. Regarding mis-declaration of value, respondent can act post DRI's adjudication, ensuring no limitation bar due to petitioner's request for proceedings deferment.

In summary, the judgment highlighted the importance of natural justice, requiring respondents to provide necessary details for fair assessment. It emphasized the need for independent enquiry before demanding tax based on external notices, ensuring due process and rights of the petitioner. The Court's directions aimed to uphold fairness and procedural correctness in tax assessments, balancing the interests of both parties.