2019 (3) TMI 1083 - HC - VAT and Sales Tax

Validity of assessment order - TNVAT Act - no opportunity to produce the relevant documents pertaining to the purchases - principles of natural justice - Held that - Admittedly, no request was made either to the petitioner or to the other end sellers requesting them to produce copies of invoices. Further, both the other end seller as well as the petitioner who is a purchaser belong to the same tax circle under the respondent - In the instant case, the purchasing dealer as well as the other end seller have reported their sales and purchase to the respondent and there is no suppression of the sale or the purchase to the respondent by either of them. All these factors were not duly considered by the respondent in the impugned assessment order. Further no opportunity of personal hearing was given to the petitioner while passing the impugned assessment order. The matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders, after giving sufficient opportunity to the petitioner to raise all objections available to him under law - petition allowed by way of remand.

Summary

Issues: Challenge to assessment order under Tamil Nadu Value Added Tax Act, 2006 without opportunity to produce relevant documents, violation of principles of natural justice, availability of alternative appellate remedy under Section 51 of the Act.

Analysis:

The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged an assessment order dated 15.06.2015, alleging that the respondent did not consider the sales and purchases reported by both the petitioner and the other sellers. The petitioner contended that no request was made to produce invoices, leading to the assessment order demanding payment of additional tax. The petitioner argued that the respondent violated Section 19(1) of the Act by not allowing the submission of relevant documents before passing the order.

During the hearing, the petitioner's counsel highlighted the petitioner's response to the pre-revision notice, where annexures detailing purchases from other sellers were enclosed. The counsel emphasized that the other sellers were also registered under the Act and could have provided clarification if needed. Reference was made to a previous court ruling stating that failure by the selling dealer to disclose turnover does not justify reversing input tax credit for the purchasing dealer. The petitioner asserted that both the selling and purchasing dealers had reported their transactions, indicating compliance.

The respondent's counsel argued that the petitioner had an appellate remedy under Section 51 of the Act and contended that the objections raised by the petitioner were duly considered in the assessment order. However, the court noted that no opportunity for a personal hearing was provided to the petitioner before passing the impugned order, which was a violation of natural justice principles.

Considering the facts and legal precedents, the court quashed the assessment order and remanded the matter to the respondent for fresh consideration. The court directed the respondent to allow the petitioner to raise objections and provide a personal hearing within eight weeks. The writ petition was disposed of without costs, and the connected miscellaneous petition was closed.