2017 (11) TMI 592 - HC - VAT and Sales Tax

Principles of Natural Justice - Revision of assessment order - input tax credit - TNVAT Act - Held that - the respondent could have afforded an opportunity to the petitioner and directed them to appear in person and produce necessary details and records to substantiate their stand - there has been violation of principles of natural justice in passing the impugned orders - this Court is of the considered view that the assessment should be re-done by the respondent after affording an opportunity of personal hearing - petition allowed by way of remand.

Summary

Issues Involved:
Challenge to assessment orders/proceedings under TNVAT Act for the years 2010-2011 to 2015-2016, violation of principles of natural justice in passing the impugned orders, eligibility for Input Tax Credit (ITC), lack of opportunity for personal hearing.

Analysis:

1. Challenge to Assessment Orders/Proceedings:
The petitioner, a registered dealer under the TNVAT Act, challenged the revision of assessment for the years 2010-2011 to 2015-2016. The Enforcement Wing Officers found discrepancies in the purchase details reported in monthly returns and audited accounts, leading to proposed revisions of turnover. The petitioner objected, citing a misunderstanding regarding reporting non-taxable goods in returns, and highlighted differences in purchase details between audited statements and returns. The court noted that the petitioner was not afforded a personal hearing, indicating a procedural lapse.

2. Violation of Principles of Natural Justice:
The court observed that the respondent failed to provide the petitioner with an opportunity for a personal hearing before completing the assessments. The respondent, through the learned Government Advocate, acknowledged the petitioner's ineligibility for ITC but admitted the failure to direct the petitioner to substantiate their objections in person. The court held that this omission constituted a violation of natural justice principles, necessitating a re-assessment with a proper opportunity for a personal hearing.

3. Eligibility for Input Tax Credit (ITC):
The petitioner contended that they were not eligible for ITC as they were paying tax under a specific section of the TNVAT Act. The respondent confirmed this position but acknowledged the need to allow the petitioner to present supporting details and records. The court emphasized the importance of providing a fair opportunity for the petitioner to substantiate their objections and directed the respondent to redo the assessment after a personal hearing.

4. Lack of Opportunity for Personal Hearing:
The court concluded that the absence of a personal hearing for the petitioner before finalizing the assessments constituted a violation of natural justice. Consequently, the court directed the petitioner to treat the assessment proceedings as show cause notices and submit objections with supporting records within 15 days. The respondent was instructed to conduct a personal hearing, verify the submitted details, and redo the assessment in compliance with the law. Until new orders were issued, no coercive action for tax recovery was permitted based on the impugned assessment proceedings.

In summary, the judgment highlighted the importance of adhering to principles of natural justice, ensuring a fair opportunity for parties to present their case, and directing a re-assessment process with a proper personal hearing to rectify procedural deficiencies.