2018 (5) TMI 1285 - HC - VAT and Sales Tax

Principles of Natural Justice - non-service of additional proposals on the petitioner - deprivation of an opportunity to file an objection with regard to the same - Held that - Imposing tax on uncommunicated proposals certainly would amount to violation of principles of natural justice. While confirming proposals, the second respondent has also confirmed additional proposals and levied tax to the tune of ₹ 8,55,299/-. In the counter affidavit also, it is categorically stated that a notice of hearing was given referring to the issuance of evasion of tax. But, specific proposals have not been served on the petitioner before confirming the additional proposals. The second respondent is directed to issue fresh notice incorporating all the proposals along with materials relied on by him and call for objections from the petitioner - appeal allowed by way of remand.

Summary

Issues:
Challenge to impugned proceedings for tax assessment and penalty under TNVAT Act, 2006 based on surprise inspection, additional proposals confirmed without serving on the petitioner, violation of principles of natural justice.

Analysis:
The petitioner, a dealer in iron scraps, filed returns for assessment years but faced proceedings for suppression of taxable turnover and penalty under TNVAT Act based on a surprise inspection. The second respondent issued a Pre-Revision Notice, initially with five proposals, but later confirmed additional proposals without serving them on the petitioner. The petitioner alleged non-service of additional proposals and lack of opportunity to object, leading to the current challenge.

The Government Advocate argued that despite sending notice for objections and final hearing, the petitioner did not appear, justifying the confirmation of additional proposals. The respondents claimed large-scale tax evasion based on web-site data and argued that the dealer had knowledge of the additional proposals, justifying the confirmation without serving them. The Government Advocate sought dismissal of the writ petitions.

Upon considering the submissions, the Court found that the second respondent confirmed additional proposals without following proper procedure, imposing tax without serving specific proposals on the petitioner. The Court referenced a similar case where exceeding the original proposal in assessment proceedings was deemed a violation of law. Consequently, the impugned orders were set aside, and the matters were remanded for fresh consideration by the second respondent.

In line with the judgment, the Court directed the second respondent to issue a fresh notice with all proposals and materials, allowing the petitioner to submit objections and affording a personal hearing within specified timelines. The writ petitions were allowed, no costs were imposed, and the connected miscellaneous petitions were closed.