2018 (1) TMI 866 - HC - VAT and Sales Tax

Validity of assessment order - TNGST Act - penalty u/s 16(2) of the Act - grievance of the appellant / writ petitioner is that despite the fact of seizing of C.P.U. by the Central Excise Department and without giving any personal hearing or opportunity, the assessment order, dated 16.03.2009, was made by the respondent - Held that - The assessment order was issued on 27.02.2004. The pre-revision notice was issued on 28.02.2006 for which the petitioner has submitted his response on 20.04.2006 and thereafter, submitted one more representation on 06.03.2009 praying for time to file objection for the reason that the records is in C.P.U., which was seized by the Central Excise Department. However, it was rejected and the impugned order came to be passed on 16.03.2009. In the considered opinion of this Court, in the light of the said fact, Section 16(1)(a) of the TNGST Act would not come to the aid of the appellant / writ petitioner. Before passing the revision order, the dealer should be given reasonable opportunity and personal hearing, if required so, as per Section 22(4) of the TNVAT Act, 2006. No order of revision should be made without affording an opportunity to the dealer as provided under Sections 22, 25, 27 of the Act. The impugned order, dated 02.06.2016, passed in W.P.(MD).No.2931 of 2009 as well as the impugned order, dated 16.03.2009, passed by the respondent are set aside subject to the condition that the appellant / writ petitioner shall deposit 15% of tax admitted by the appellant / writ petitioner to the credit of the respondent - Petition allowed in part.

Summary

Issues:
1. Assessment order passed beyond the statutory period of five years.
2. Failure to provide a personal hearing before passing the revision order.
3. Availability of alternative remedy under Section 31 of the TNGST Act.

Analysis:

Issue 1: Assessment order passed beyond the statutory period of five years
The appellant, a registered dealer under the TNGST Act, challenged the assessment order passed by the respondent, claiming that the order dated 16.03.2009 was beyond the statutory period of five years from the original assessment order of 27.02.2004. The appellant contended that the delay in passing the order rendered it liable to be quashed. However, the respondent argued that notices were issued within the prescribed time frame, and hence, Section 16(1)(a) of the TNGST Act did not apply in this case. The Court opined that the delay in passing the order did not fall within the purview of Section 16(1)(a) and dismissed this ground of challenge.

Issue 2: Failure to provide a personal hearing before passing the revision order
The appellant raised a crucial point regarding the lack of a personal hearing before the revision order was passed. The appellant contended that as per circulars, a reasonable opportunity of personal hearing should have been provided before passing the revision order. The Court noted that the impugned order of 16.03.2009 did not afford the appellant a personal hearing, which was a violation of procedural fairness. Citing the importance of personal hearing as per the circular, the Court held that the absence of this opportunity warranted interference with the impugned order.

Issue 3: Availability of alternative remedy under Section 31 of the TNGST Act
The respondent argued that the appellant had an alternative remedy under Section 31 of the TNGST Act, which required filing an appeal within 30 days from the receipt of the assessment order. The Court acknowledged the existence of this alternative remedy and emphasized the necessity of satisfactory proof of tax payment for filing an appeal. While recognizing the availability of an alternative remedy, the Court found that the appellant had filed the writ petition within the statutory period, granting liberty to file an appeal. The Court considered this aspect in determining the course of action and directed the appellant to follow the prescribed procedure for appeal.

In conclusion, the High Court partly allowed the writ appeal, setting aside the impugned orders subject to certain conditions. The Court directed the appellant to deposit a percentage of the admitted tax, receive a personal hearing, and proceed with the revision of assessment within stipulated timelines. Failure to comply would result in automatic dismissal of the appeal. The judgment highlighted the importance of procedural fairness, adherence to statutory timelines, and the availability of alternative remedies under the TNGST Act.