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2019 (7) TMI 3 - HC - VAT and Sales TaxClassification of goods - Uninterrupted Power Supply (UPS) and battaries thereto - while these products according to the writ petitioners are UPS and battaries thereto according to the respondent they are voltage stabilizers - Rate of tax - opportunity of personal hearing not provided - principles of natural justice - HELD THAT - A perusal of the case of CANON INDIA PRIVATE LIMITED VERSUS STATE OF TAMIL NADU THROUGH SECRETARY MINISTRY OF EDUCATION AND COMMERCIAL TAXES COMMERCIAL TAXES DEPARTMENT 2013 (8) TMI 569 - MADRAS HIGH COURT reveals that it is a matter touching upon classification of a undisputed product and not on the question of a factual dispute as to what the product itself is - In the instant case as already alluded to supra the central issue is the factual dispute as to what the product is? i.e. whether it is Voltage Stabilizer or UPS. Be that as it may it may not be necessary to advert to this aspect further and make any discussion on this aspect of the matter as this Court considers it appropriate to direct the respondent to give one more personal hearing owing to 25.02.2019 communication and 08.04.2019 reply thereto. Assessment Orders are set aside only on the ground of further personal hearing (post 25.02.2019 communication from Revenue and writ petitioner s reply to same) not being given - matter remanded for reconsideration - appeal allowed by way of remand.
Issues:
1. Classification dispute between Uninterrupted Power Supply (UPS) and voltage stabilizers under Central Sales Tax Act and Tamil Nadu Value Added Tax Act. 2. Violation of natural justice principles in assessment proceedings. 3. Adherence to court directions in assessment process. 4. Need for further personal hearing post submission of documents. Issue 1: Classification dispute between UPS and voltage stabilizers The central dispute in the case revolved around the classification of products manufactured by the writ petitioner as either Uninterrupted Power Supply (UPS) or voltage stabilizers. The TNVAT Act categorizes goods into different parts for taxation purposes, with UPS falling under Part-B and taxable at 5%, while voltage stabilizers are listed under Part-C and taxable at 14.5%. The assessment years in question were 2014-15 and 2015-16, and the respondent had passed an Assessment Order which was challenged by the writ petitioner. The court emphasized the importance of correctly identifying the nature of the products to determine the appropriate tax liability under the respective statutes. Issue 2: Violation of natural justice principles in assessment proceedings The court noted that in a previous order, it had directed the respondent to treat the Assessment Orders as show-cause notices, allowing the writ petitioner to submit objections and have a personal hearing. However, after the initial personal hearing, the respondent requested additional documents without providing another opportunity for a personal hearing. The writ petitioner argued that this violated natural justice principles and was not in line with the court's earlier directive. The court agreed with the petitioner's contention and set aside the assessment orders solely on the ground of the lack of a further personal hearing post the request for additional documents. Issue 3: Adherence to court directions in assessment process The court highlighted the importance of following its directions in the assessment process. It emphasized that the respondent should have provided another personal hearing after requesting additional documents to verify the contentions made by the writ petitioner. The court referred to a previous judgment regarding the need for an independent decision-making process and reiterated the necessity for the respondent to conduct assessments in accordance with the law and the court's directives. Issue 4: Need for further personal hearing post submission of documents Given the circumstances where the respondent had requested additional documents post the initial personal hearing, the court directed the respondent to conduct one more personal hearing. This hearing was to be limited to the documents requested in the communication dated 25.02.2019 and the writ petitioner's reply dated 08.04.2019. The court specified that no new documents or pleas should be introduced during this hearing, and matters already discussed in the previous personal hearing should not be revisited. The court set a deadline for the respondent to pass fresh Assessment Orders based on the additional hearing. In conclusion, the judgment addressed the classification dispute between UPS and voltage stabilizers, emphasized the importance of natural justice principles in assessment proceedings, reiterated the need for adherence to court directions, and mandated a further personal hearing following the submission of additional documents.
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