2020 (11) TMI 661 - HC - VAT and Sales Tax

Violation of principles of natural justice - Validity of assessment order - purchase omission committed by the petitioner - sales suppression - mismatch between the sales and purchases - TNVAT Act - HELD THAT - Even though the petitioner has raised all the aforementioned contentions in the reply dated 07.03.2018 to the pre revision notice, dated 07.02.2018, the respondent under the impugned assessment order has not considered the same, but has passed the assessment order only based on the alleged sworn statements signed by the petitioner at the time of inspection by their Enforcement Wing Officials at the place of business of the petitioner. As seen from the impugned assessment order, no personal hearing was afforded to the petitioner before passing of the impugned assessment order. This Court is of the considered view that principles of natural justice have been violated by the respondent before passing of the impugned assessment order and therefore, the Writ Petition is maintainable - the matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders on merits and in accordance with law after affording sufficient opportunity to the petitioner including granting them the right of personal hearing within a period of twelve weeks from the date of receipt of a copy of this order. Petition allowed by way of remand.

Summary

Issues:
Challenging assessment order under TNVAT Act, 2006 for violation of natural justice principles.

Analysis:
The petitioner challenged the assessment order dated 13.03.2018 under the TNVAT Act, 2006, alleging a violation of natural justice principles by the respondent. The petitioner contended that the defects pointed out by the respondent in the pre-assessment notice on 07.02.2018, related to purchase omission, sales suppression, and mismatch between sales and purchases, were unjustly accepted without proper consideration. Despite the petitioner's detailed reply on 07.03.2018, asserting that TNVAT Act, 2006 did not apply to their cargo handling business, the respondent allegedly disregarded this response and passed the assessment order solely based on a sworn statement signed by the petitioner during an inspection by Enforcement Wing Officials.

The petitioner argued that the respondent failed to address their contentions and ignored the assertion that TNVAT Act, 2006 was not applicable to their business. The petitioner emphasized that the assessment order lacked proper consideration of their reply, leading to a violation of natural justice principles. The respondent, represented by the Special Government Pleader, contended that the petitioner had a statutory appellate remedy available under the TNVAT Act, 2006, which should have been pursued instead of filing the writ petition. The respondent maintained that the petitioner's reply was duly considered, and the assessment order was based on the sworn statement provided during the inspection, denying any breach of natural justice principles.

Upon examination of the pre-revision notice, the petitioner's reply, and the assessment order, the Court noted that the respondent did not dispute the receipt of the petitioner's reply dated 07.03.2018. The petitioner had explicitly stated in their response that TNVAT Act, 2006 did not apply to their cargo handling business due to their licensing and operations. However, the respondent's assessment order did not acknowledge this crucial assertion. The respondent's justification for the assessment order was the sworn statement obtained during the inspection, alleging purchase omission and unreported sales.

The Court found that the respondent's failure to consider the petitioner's contentions in their reply, coupled with the absence of a personal hearing before the assessment order, amounted to a violation of natural justice principles. Consequently, the Court quashed the assessment order and remanded the matter back to the respondent for fresh consideration. The respondent was directed to provide the petitioner with a right to a personal hearing and to pass final orders within twelve weeks, ensuring due process and adherence to the law.

In conclusion, the Court upheld the writ petition, ruling in favor of the petitioner and emphasizing the importance of procedural fairness and adherence to natural justice principles in assessment proceedings under the TNVAT Act, 2006.