2019 (8) TMI 780 - HC - VAT and Sales Tax

Principles of natural justice - Random scrutiny under Section 22(3) of TNVAT Act - case of petitioner is that writ petitioner had not received any notice prior to the impugned orders - requirement for calling for the accounts of the dealer, scrutinize the same and then pass appropriate orders - HELD THAT - While there can be no disputation that Section 22(3) of TNVAT Act itself provides for revision of assessment as the same has to be preceded by the procedure of calling for accounts of the assessee and as the impugned orders as placed before this Court do not mention any where that it was preceded by a notice much less a notice calling for the accounts, this Court deems it appropriate to send the matter back to the respondent with a direction to call for the accounts from the writ petitioner for detailed scrutiny and redo the revised assessment in accordance with the mandate in Rule 10(11) of TNVAT Rules. The impugned orders are set aside solely on the ground that there is no mention in the impugned orders that accounts of the assessee (writ petitioner) were called for detailed scrutiny prior to revision of assessment - Respondent is directed to call for the accounts of the writ petitioner assessee for detailed scrutiny and pass revised assessment order as expeditiously as possible - petition allowed by way of remand.

Issues involved:
Assessment under Central Sales Tax Act, 1956 for the years 2015-16 and 2017-18; Interpretation of Section 22(3) of Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) and Rule 10(11) of TNVAT Rules; Validity of revised assessment orders without prior notice to the dealer; Compliance with procedural requirements for detailed scrutiny of accounts before revising assessments.

Analysis:

Assessment under CST Act and TNVAT Act:
The High Court addressed the matter concerning assessments under the Central Sales Tax Act, 1956 for the years 2015-16 and 2017-18, noting the transition to the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) post-2007. The court highlighted that the TNVAT Act is the applicable statute for assessments, emphasizing the importance of procedural compliance under this Act for assessment purposes.

Interpretation of Section 22(3) of TNVAT Act and Rule 10(11) of TNVAT Rules:
The court delved into the interpretation of Section 22(3) of the TNVAT Act and Rule 10(11) of the TNVAT Rules. It specifically focused on the requirement for detailed scrutiny of returns submitted by dealers, highlighting the procedure for selecting cases for scrutiny and the subsequent revision of assessments where necessary. The court emphasized the importance of adherence to these provisions for conducting assessments in a legally sound manner.

Validity of Revised Assessment Orders:
The court scrutinized the revised assessment orders issued to the petitioner for the assessment years in question. It was noted that the orders were made pursuant to random selection for scrutiny under Section 22(3) of the TNVAT Act. The court observed that the petitioner had not received any prior notice before the issuance of these revised assessment orders, which raised concerns regarding procedural fairness and compliance with statutory requirements.

Compliance with Procedural Requirements:
The court examined the submissions made by both parties regarding the necessity of calling for the dealer's accounts for detailed scrutiny before revising assessments. It was highlighted that while Section 22(3) of the TNVAT Act allows for revision of assessments, such revisions must be conducted in accordance with Rule 10(11) of the TNVAT Rules. The court emphasized the procedural mandate for assessing authorities to call for accounts for detailed scrutiny before passing appropriate orders, ensuring fairness and transparency in the assessment process.

Court's Decision and Directions:
In light of the above considerations, the court set aside the impugned orders without expressing any opinion on their merits. The court directed the respondent to call for the petitioner's accounts for detailed scrutiny and to redo the revised assessments in compliance with Rule 10(11) of the TNVAT Rules. The court emphasized the importance of procedural regularity and transparency in conducting assessments and provided clear directives for the revised assessment process to be followed expeditiously.

Conclusion:
The High Court's judgment underscored the significance of procedural compliance and fairness in the assessment process under the TNVAT Act. By setting aside the impugned orders and directing the respondent to adhere to the prescribed procedures for detailed scrutiny of accounts, the court ensured that assessments are conducted in a legally sound manner, upholding the principles of natural justice and procedural regularity in tax matters.

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