2019 (9) TMI 11 - HC - VAT and Sales Tax

Penalty u/s 27(4) of TNVAT Act - Validity of assessment order - deemed assessment under Section 22(2) of TNVAT Act - reversal of ITC on ineligible commodities - HELD THAT - The issue decided in the case of SUSPA PNEUMATICS (INDIA) PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER (ST) 2019 (8) TMI 121 - MADRAS HIGH COURT where it was held that entire sub-section (4) of Section 27 of TNVAT Act i.e. this provision together with the proviso whicih was inserted in the statute book on and with effect from 29.01.2016 but it is also noticed that the proviso makes it statutorily imperative to give reasonable opportunity of showing cause being given before imposition of penalty was there even prior to 29.01.2016 The impugned Assessment Orders are set aside solely on the ground of non-adherence to proviso to Section 27(4) as penalty under Section 27(4) has been imposed vide impugned Assessment Orders without giving the writ petitioner an opportunity to show cause against the same - matter remanded for fresh consideration - petition allowed by way of remand.

Summary

Issues:
Assessment under TNVAT Act, 2006 - Impugned Assessment Orders - Imposition of penalty under Section 27(4) without opportunity to show cause.

Analysis:

The judgment pertains to two writ petitions challenging the impugned Assessment Orders dated 28.06.2019 for Assessment years 2013-14 and 2014-15 under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The core issue revolves around the imposition of a 100% penalty under Section 27(4) of the TNVAT Act without providing the writ petitioner an opportunity to show cause against the penalty. The court noted that the proviso to Section 27(4) mandates giving a reasonable opportunity of showing cause before imposing a penalty, and this requirement existed even before a statutory amendment on 29.01.2016. The court observed that in the instant case, although a provisional notice was issued, there was no evidence of the writ petitioner being afforded a reasonable opportunity to present their case against the penalty.

The judgment highlights that the writ petitions were directly covered by an earlier order of the court dated 25.07.2019, which dealt with similar issues under the TNVAT Act for different assessment years. The court emphasized that the factual matrix remained consistent, and the writ petitioner's submissions primarily focused on the lack of opportunity to contest the penalty. Consequently, the court set aside the impugned Assessment Orders solely on the grounds of non-compliance with the proviso to Section 27(4) regarding the imposition of the penalty without affording the writ petitioner a chance to present their case.

In terms of directions, the court ordered the impugned Assessment Orders for the relevant years to be set aside, emphasizing that this decision did not reflect any opinion on the merits of the case. The court scheduled a personal hearing for the writ petitioner on a specified date to address any further objections, particularly regarding the penalty imposed in the revised Assessment Orders. It was highlighted that failure to attend the personal hearing would result in the automatic revival of the impugned revised Assessment Orders. However, if the writ petitioner participated in the hearing and submitted additional objections with supporting documents, the respondent was instructed to reconsider all objections, conduct a fresh assessment, and issue revised Assessment Orders promptly, within eight weeks from the date of the personal hearing.

Ultimately, the judgment concluded by disposing of the writ petitions with the outlined directions, without imposing any costs on either party. The connected writ miscellaneous petitions were also closed as a result of the judgment.