2018 (10) TMI 687 - HC - VAT and Sales Tax

Calling of records relating to the assessmentorder dated 20.10.2009 - to afford an opportunity to file objections - inter-state sales - delayed payment of tax alongwith Interest - the respondent has proceeded to pass the impugned assessment order on the statement given by the petitioner before the Enforcement officers that the sale bill books related to the years 2003-04 and 2004-05 were lost during the time of celebration of Saraswathi Pooja and were not in possession of the counterfoil of the sale bills raised. Held that - The respondent cannot proceed solely based on the report of the Enforcement officers and they have to independently apply their mind, but without even looking into the records produced by the petitioner, the respondent came to the conclusion that since the petitioner had deposed before the Enforcement officers that the records were misplaced during the celebration of Saraswathi Pooja, the records now produced by the petitioner are only manipulated records - The said conclusion of the respondent cannot be accepted and the respondent ought to have looked into the records produced by the petitioner and should have afforded opportunity to the petitioner to file their objections and also the personal hearing and only thereafter, the respondent shall render a finding whether the records produced by the petitioner are manipulated or not. The petitioner is directed to file their written objections within a period of two weeks from the date of receipt of a copy of this order and thereafter, therespondent shall consider the same and also provide opportunity of personal hearing to the petitioner - impugned order set aside.

Summary

Issues:
1. Assessment order challenged for lack of opportunity to file objections.
2. Discrepancies in turnover calculation and alleged manipulation of records.
3. Failure to maintain proper accounts leading to disputed assessment.

Analysis:
1. The petitioner, a dealer in fireworks, challenged the assessment order of the respondent under the TNGST Act for the year 2004-05, citing lack of opportunity to file objections. The petitioner contended that despite submitting returns and paying taxes, certain inter-state sales turnover tax was not paid on time. The respondent issued a pre-assessment notice in 2007, mentioning specific bill numbers related to Central Sales Tax turnover, which the petitioner claimed were already disclosed in monthly returns before an inspection in 2007. The petitioner argued that the assessment order in 2009 was passed without allowing them to file objections, violating principles of natural justice.

2. The respondent, in their defense, stated that the petitioner did not maintain proper accounts for the year 2004-05, leading to challenges in verifying check post bills during an inspection in 2001. The respondent based the assessment on a total and taxable turnover amount, which the petitioner disputed. The respondent contended that the accounts produced by the petitioner after receiving the pre-assessment notice in 2007 were manipulated and not maintained in the regular course of business. The respondent also highlighted discrepancies in the petitioner's claims regarding lost sale bill books and disputed the accuracy of turnover calculations.

3. The court observed that the respondent's assessment solely relied on the petitioner's statement about lost records without independently verifying the produced records. The court emphasized that the respondent should have examined the records and provided an opportunity for the petitioner to file objections and a personal hearing before reaching a conclusion on the authenticity of the records. Consequently, the court set aside the assessment order and directed the petitioner to submit written objections within two weeks, attend a personal hearing with all records, and cooperate with the inquiry. The respondent was instructed to consider the objections and pass appropriate orders within four weeks, warning that non-cooperation would result in orders being passed in accordance with the law.

In conclusion, the court allowed the writ petition, setting aside the assessment order and providing directions for a fair assessment process.