2019 (5) TMI 1336 - HC - VAT and Sales Tax

Principles of natural justice - Validity of assessment order - TNVAT Act - suppression of purchases - HELD THAT - This Court has perused and examined the impugned Assessment Order. The second respondent proposed to revise the assessment of the petitioner for the Assessment year 2014-15 based on an inspection carried out by their Enforcement Wing officials on 19.09.2016, wherein according to the second respondent, it was found that the petitioner has suppressed purchases effected from the other end seller and had claimed excess input tax credit. According to the second respondent, due to the suppression of purchase and claim of excess input tax credit, the same will have to be reversed - admittedly, no reply was sent by the petitioner to the pre-revision notice issued by the second respondent on 03.01.2019 proposing the revision of assessment for the assessment year 2014-15. In the instant case, neither personal hearing was afforded to the petitioner nor an independent enquiry was held by cross verifying the sales effected by the other end seller to the purchaser based on which a pre-revision notice dated 03.01.2019 was sent by the second respondent proposing to revise the assessment of the petitioner for the assessment year 2014-15. From the above, it is clear that the second respondent has violated the principles of natural justice and has also not applied his mind before passing the impugned assessment order. This matter is remanded back to the second respondent for fresh consideration - petition allowed by way of remand.

Summary

Issues involved:
Challenging Assessment Order dated 28.02.2019 for Assessment year 2014-15 under TN VAT Act, 2006.

Analysis:

1. Allegations of Suppressed Purchases and Tax Evasion:
The petitioner, a registered dealer under TN VAT Act, 2006, challenged the Assessment Order alleging suppression of purchases for the Assessment Year 2014-15. The second respondent issued notices based on an inspection, claiming the petitioner suppressed purchases and proposed to levy tax and penalty. The petitioner contended that after paying the tax and penalty, a subsequent notice was issued, repeating the allegations of suppressed purchases and proposing to reverse input tax credit claimed under original returns.

2. Violation of Principles of Natural Justice:
The petitioner argued that the second respondent passed the impugned assessment order without providing adequate opportunity for objections or a personal hearing. Despite the petitioner denying the allegations and requesting supporting documents, the assessment order was passed without the petitioner's reply, indicating a violation of natural justice principles.

3. Lack of Verification and Independent Enquiry:
The petitioner asserted that no intra-departmental enquiry was conducted, and sales and purchases were not cross-verified with other dealers. The assessment order lacked independent assessment and verification, as the respondent solely relied on department reports without conducting a separate enquiry.

4. Judicial Intervention and Remand:
The High Court examined the impugned Assessment Order and found deficiencies in the assessment process, including the absence of a personal hearing and independent verification. Consequently, the Court quashed the assessment order and remanded the matter back to the second respondent for fresh consideration. The Court directed the respondent to allow the petitioner to raise objections, file a reply, and provide a personal hearing within a specified timeframe for a fair assessment process.

5. Conclusion:
The High Court disposed of the Writ Petition, ordering a fresh consideration of the assessment with adherence to principles of natural justice. The Court emphasized the importance of affording opportunities for objections, replies, and personal hearings to ensure a fair and just assessment process under the TN VAT Act, 2006.