2023 (3) TMI 4 - HC - VAT and Sales Tax

Validity of assessment order - sufficient opportunity of hearing has been provided or not - scope of the word 'reasonable opportunity of hearing' under Section 31 of the Tripura Value Added Tax Act, 2004 - respondents has contended that since a show cause notice was given, the same itself was sufficient in respect of providing of reasonable opportunity of hearing - HELD THAT - The Assessing Officer cannot pass an order on the basis of pure suspicion and surmised without giving reasonable opportunity of hearing the case which is sought to be made out in the assessment order. In other words, though the Assessing Officer can make such inquiries, he must give an opportunity of being heard which is not an empty formality or ritual or a pretence. It is a valuable right granted to the assessees and, in fact, is an important safeguard against arbitrary assessments. It cannot be taken lightly by the authorities. The opportunity must be real and reasonable. If an assessee, who is asked to furnish certain particulars or submit explanations within a specified time, prays for further time stating his difficulties or reasons, his prayer should be considered judiciously. Sometimes, as in the present case, for assessment for a number of years are taken up together and the assessee is asked to appear and produce evidence in support of his returns. On consideration of the evidence produced by the assessee, the Assessing Officer might require some further particulars or information which might not be possible for the assessee to submit instantaneously, for various reasons. The Assessing Authority cannot pass an order merely on the basis of pure guess and suspicion and surmises - the petitioner in this case was asked to furnish certain information for which he wanted time on the ground that assessments for four years were being taken up at a time and it was not possible during COVID period to bring the original invoices from Mumbai and thus his prayer was rejected. The petitioner was thus denied reasonable opportunity of hearing and on that score itself, the impugned order of assessment cannot be sustained as the same being made in violation of principles of natural justice. The impugned orders of assessment dated 26.03.2021 as well as the notice of demand for the assessment years 2015-16 to 2017-18 stands set aside and the matter is remanded back to the concerned authorities to issue a fresh proceeding in accordance with law - Petition allowed by way of remand.

Summary

Issues:
Challenge to impugned orders of assessment and demand notice under Tripura Value Added Tax Act, 2004 for assessment years 2015-16 to 2017-18.

Analysis:
The petitioner, a dealer in various goods, challenged the assessment orders and demand notice issued by the respondent state tax department for the assessment years 2015-16 to 2017-18. The petitioner had filed returns and documents for these years, assuming they were accepted as there was no communication from the tax department. However, during the COVID period, a show cause notice was issued, alleging suppression of previous notices and selecting the petitioner for audit assessment. The petitioner replied with document photocopies and requested time to produce original invoices due to COVID-related difficulties, but the assessment orders and demand notices were issued without waiting for the invoices.

The main contention raised by the petitioner was the denial of a reasonable opportunity of hearing as required under Section 31 of the Tripura Value Added Tax Act, 2004. The petitioner argued that the term "reasonable opportunity" must be interpreted strictly and not merely as the issuance of a show-cause notice. The petitioner emphasized that the opportunity of being heard should be real and effective, not just a formality. The petitioner cited legal precedents to support the argument, highlighting the importance of genuine opportunities for assessees in tax matters.

The court analyzed the principles of natural justice applicable to tax assessments, emphasizing the importance of providing a genuine opportunity to be heard before making decisions. The court noted that assessments based on suspicion and surmises without affording a reasonable opportunity of being heard are arbitrary and against the principles of natural justice. In this case, the court found merit in the petitioner's argument that they were denied a fair chance to present evidence in support of their returns, leading to an unjust assessment based on guesswork rather than evidence.

Consequently, the court set aside the impugned orders of assessment and demand notices for the assessment years 2015-16 to 2017-18. The matter was remanded back to the authorities for fresh proceedings in compliance with the law, with a directive to complete the process within two months. The court's decision was based on upholding the principles of natural justice and ensuring that taxpayers are provided with genuine opportunities to present their case in tax assessments.