2019 (3) TMI 1082 - HC - VAT and Sales Tax

Compounded rate of tax - completion of deemed assessment - Restaurant business - TNVAT Act - estimation of taxable turnover - It is the case of the petitioner that based on the one day sales, the respondent cannot estimate the total taxable turnover - principles of natural justice - Held that - The objection regarding assessment based on one day sales on the date of inspection by the Enforcement Wing of the respondent (i.e., on 07.11.2014), has not been duly considered by the respondent. Even though, the petitioner had cited various authorities, which according to him, support his case the said authorities have not been duly considered by the respondent. The petitioner is doing restaurant business and it is common knowledge that the sales turnover varies from day to day - On working days it will be lesser and on festival day and public holidays it will be generally higher. Therefore, one day sales turnover cannot be the basis for assessing the total taxable turnover. Eventhough, the authorities were placed by the petitioner before the respondent, the said authorities have not been considered by the petitioner - Further, in the instant case, no personal hearing was granted to the petitioner, eventhough a specific request was made by the petitioner, in his reply dated 04.01.2016 - It is well settled that personal hearing will have to be granted to the assessee under the Tamil Nadu Value Added Tax Act, 2006 as held by the internal circular bearing circular No.7 of 2013 of the Principal Commissioner of Commercial Tax. The matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders, after giving sufficient opportunity of hearing to the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to the impugned assessment order based on one day sales turnover and lack of consideration of objections raised by the petitioner.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged the assessment order passed by the respondent, contending that the turnover estimation exceeding ?50 lakhs made him ineligible to pay tax at a compounded rate under Section 8(1)(a) of the Act. The petitioner argued that the assessment was based on one day sales turnover, which is not an accurate representation of the total taxable turnover. The petitioner raised objections in his reply dated 04.01.2016, citing various authorities supporting his case, but these objections were not duly considered by the respondent in the impugned assessment order. The petitioner also claimed that he was not given a sufficient opportunity to raise objections, alleging a violation of the principles of natural justice.

The Court examined the impugned assessment order and noted that the objection regarding assessment based on one day sales turnover was not adequately addressed by the respondent. The Court emphasized that one day sales turnover cannot be the sole basis for assessing the total taxable turnover, considering the fluctuating nature of sales in a restaurant business. The Court referenced judgments such as State of Tamil Nadu Vs. New Kamaliya Hotel and State of Tamil Nadu Vs. Hotel Ashok Bhavan to support the petitioner's case. Additionally, the Court highlighted the importance of granting a personal hearing to the assessee, as mandated by the Tamil Nadu Value Added Tax Act, 2006 and relevant judicial precedents.

Consequently, the Court quashed the impugned assessment order and remanded the matter back to the respondent for fresh consideration. The Court directed the respondent to provide the petitioner with a sufficient opportunity for hearing, allowing him to raise all objections under the law and granting him the right of personal hearing. The respondent was instructed to pass final orders within eight weeks from the date of receipt of the Court's order, ensuring compliance with the principles of natural justice and procedural fairness.

In conclusion, the Court disposed of the Writ Petition with the aforementioned directions, emphasizing the importance of considering all objections raised by the petitioner and providing a fair opportunity for a personal hearing in tax assessment proceedings.