2021 (8) TMI 309 - HC - VAT and Sales Tax

Principles of natural justice - without giving any opportunity for explaining the case, the respondent had passed the impugned order - rate of tax on restaurant services - HELD THAT - Admittedly, the petitioner has not given reply to the notice issued by the respondent on 23.02.2020 and the impugned order came to be passed on 11.11.2020 which is an ex-parte order. The learned counsel for the petitioner has specifically contended that because of the pandemic situation, the petitioner's Restaurant was closed till May 2020. Section 27 of the Tamil Nadu Value Added Tax Act, 2006, provides for reasonable opportunity includes the personal hearing under Section 27(4) of the Act, which is mandatory. However, the petitioner had not responded to the notice and the respondent passed the impugned order without complying with Section 27(4) of the Act and without affording an opportunity of personal hearing. Considering the facts and circumstances of the case, this Court is of the considered view that the petitioner ought to have been given a personal hearing and therefore, the matter be remanded to the authorities for fresh consideration - Petition allowed by way of remand.

Summary

Issues:
Challenge to impugned assessment order without opportunity for explanation.

Analysis:
The petitioner, a firm running a hotel, challenged an assessment order by the respondent without being given an opportunity to explain their case. The petitioner reported a turnover for the year 2018-18 and paid VAT at 2%. However, based on an audit objection, the respondent issued a notice stating that the sale of food would be liable to tax at 14.5%. Due to the pandemic, the petitioner closed the restaurant and could not respond to the notice. The respondent passed the impugned order without allowing the petitioner to present their case, leading to the writ petition.

The petitioner's counsel argued that the impugned order should be set aside as the petitioner was not given a chance to explain, citing a relevant legal decision. On the other hand, the Government Advocate contended that the petitioner had an appeal remedy available before the Appellate Deputy Commissioner, making the writ petition not maintainable. The court heard both sides and examined the case materials.

The court noted that the petitioner did not respond to the notice due to the pandemic situation, leading to an ex-parte order. It was highlighted that under Section 27 of the Tamil Nadu Value Added Tax Act, a reasonable opportunity, including a personal hearing, is mandatory. Since the petitioner was not afforded a personal hearing, the impugned order was set aside. The court decided to remand the matter to the authorities for fresh consideration, emphasizing the importance of providing a personal hearing before passing such orders.

As a result, the writ petition was allowed, the impugned order was set aside, and the matter was remanded to the respondent for reevaluation. The respondent was directed to provide a reasonable opportunity, including a personal hearing, as required by the law. The authorities were instructed to complete this process within three months from the date of the court's order. The petitioner was also instructed to produce relevant records during the personal hearing. No costs were awarded, and the connected Miscellaneous Petition was closed.