2019 (8) TMI 1162 - HC - VAT and Sales Tax

Reversal of input tax credit - reversal on invisible and visible loss qua export sales - TNVAT Act - Section 27(1)(b) of TNVAT Act - Circular No.7 dated 03.02.2014 - reasonable opportunity not being given - principles of natural justice - HELD THAT - It may not be necessary to delve into those aspects as independent of aforementioned circular and the chronicle of dates as can be culled out from the impugned orders, this is a fit case to grant another opportunity to the writ petitioner as impugned orders have been passed on the 3rd day after the lapse of further time of 10 days that was sought for by writ petitioner. This Court has also borne in mind the position that the writ petitioner has sought for a fortnight's time first and immediately on expiry of fortnight's time, has sought for 10 more days, which means writ petitioner has sought for 25 days time in all. Further more, writ petitioner counsel now submits that he is ready to submit objections within one week from the date of receipt of a copy of this order and also attend a personal hearing if the same is held thereafter without asking for further time. Thus, the impugned orders are set aside solely on the ground of adequate time not being given for the personal hearing which the respondent in her discretion has chosen to give. On receipt of reply/objections from the writ petitioner dealer together with all supporting documents, respondent shall hold a personal hearing within a fortnight therefrom and the date, time and venue of the personal hearing shall be communicated to the writ petitioner in advance - petition allowed by way of remand.

Summary

Issues Involved:
1. Reasonable opportunity for personal hearing.
2. Adequacy of time provided for objections.
3. Compliance with departmental circulars and procedural fairness.

Issue-wise Detailed Analysis:

1. Reasonable Opportunity for Personal Hearing:
The core issue in all five writ petitions was the lack of reasonable opportunity for personal hearing provided to the petitioner. The court noted that although a personal hearing is not statutorily imperative under Section 27(1)(b) of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), the Assessing Officer had chosen to grant it. The court emphasized that once the decision to grant a personal hearing was made, it was necessary to provide a reasonable opportunity to the petitioner to present their case.

2. Adequacy of Time Provided for Objections:
The court found the time frame provided by the respondent for the petitioner to file objections—three days from the notice dated 15.02.2019—was too short. The petitioner had requested an extension of 15 days, which was not adequately addressed. The court referred to a departmental circular (Circular No.7/2014) which suggests that 15 days should be considered a reasonable time limit. The court also noted that the petitioner had requested additional time on 14.03.2019, but the impugned orders were passed on 28.03.2019, just three days after the requested extension period ended.

3. Compliance with Departmental Circulars and Procedural Fairness:
The court discussed the relevance of departmental circulars, highlighting that while they are directory and not mandatory, they provide guidance on procedural fairness. The court referenced a previous judgment (Kalai Constructions Vs. The Commercial Tax Office) which underscored the importance of considering requests for adjournments and providing clear communication regarding such requests. The court found that the petitioner was not given adequate time to respond, which compromised the principles of natural justice.

Conclusion:
The court set aside the impugned orders dated 28.03.2019 for the assessment years 2008-09 to 2012-13, solely on the ground of inadequate time provided for personal hearing. The court directed the petitioner to submit objections within one week from the date of receipt of the court's order and instructed the respondent to hold a personal hearing within a fortnight thereafter. The respondent was further directed to redo the revised assessment based on the merits of the objections and supporting documents, and to communicate the revised orders to the petitioner within 12 weeks. If the petitioner failed to submit objections or avail the personal hearing, the impugned orders would automatically revive.

The writ petitions were disposed of with these directions, and no order as to costs was made. Consequently, connected miscellaneous petitions were also closed.