2019 (3) TMI 507 - HC - VAT and Sales Tax

Principles of natural justice - imposition of penalty - no personal hearing provided - TNVAT Act - case of petitioner is that the receipt of the tax has been duly acknowledged in the impugned assessment order, the second respondent without any basis and without giving sufficient opportunity to dispute the payment and also without giving a chance of personal hearing has arbitrarily directed the petitioner to pay the penalty. Held that - As seen from the circular dated 03.02.2014 issued by the Principal Secretary/Commissioner of Commercial Taxes, Chepauk, Chennai-5, which is also not disputed by the learned Additional Government Pleader, it is clear that the petitioner ought to have been given personal hearing, whether he had opted for the same or not. In the instant case, it is the case of the second respondent that pre-assessment notice was issued to the petitioner, which was received by him. But, he did not respond to the pre-assessment notice and therefore, sufficient opportunity has been afforded to the petitioner. As seen from the impugned demand, it is claimed by the second respondent that the petitioner did not pay huge amount of tax for the purchase of goods - this Court is of the considered view that the respondents have violated the principles of natural justice by not affording sufficient opportunity including the right of personal hearing to the petitioner before passing the impugned order. The matter is remanded back to the second respondent for fresh consideration - appeal allowed by way of remand.

Summary

Issues:
Challenge to Assessment Order dated 30.06.2015 demanding penalty without proper opportunity for hearing.

Analysis:
The petitioner challenged the Assessment order dated 30.06.2015, claiming that the second respondent demanded tax during an inspection, which was immediately paid by the petitioner. However, the second respondent later imposed a penalty without providing a sufficient opportunity for the petitioner to dispute the payment or have a personal hearing. The petitioner argued that personal hearing is mandatory as per a circular issued by the Principal Secretary/Commissioner of Commercial Taxes. The petitioner also cited a Division Bench Judgment emphasizing the mandatory nature of the right to personal hearing in assessment proceedings.

The Government Advocate contended that the Assessing Officer had issued a pre-assessment notice to the petitioner, which was received but not responded to by the petitioner. The Advocate argued that the petitioner had admitted to the purchase of items mentioned in the demand by filing a return. However, the circular and the Division Bench Judgment highlighted by the petitioner were acknowledged by the Advocate, stating that failure to provide personal hearing violates principles of natural justice.

The Court, after considering the arguments presented, found that the respondents had indeed violated the principles of natural justice by not affording the petitioner sufficient opportunity, including the right to a personal hearing before passing the impugned order. Consequently, the Court quashed the impugned orders and remanded the matter back to the second respondent for fresh consideration. The second respondent was directed to pass fresh orders within twelve weeks, ensuring the petitioner is given a proper opportunity for a personal hearing as mandated by law and principles of natural justice.