2023 (8) TMI 111 - HC - VAT and Sales Tax

Failure to pay appropriate tax - import of goods for trading purpose or not - petitioner was not heard before the impugned order was passed - violations of principles of natural justice - HELD THAT - There is no admission by the petitioner in the affidavit filed in support of the present Writ Petition. Notice dated 16.06.2022 has not served on the petitioner before the impugned order dated 30.06.2022 was passed. The date 16.06.2022 in the impugned order appears to be CAG Audit defects, as is evident from the reference in the preamble to the impugned order. Copy of the said CAG Defect Memo dated 16.06.2022 of CAG Audit team also appears to have not been served to the petitioner before the impugned order was passed on 30.06.2022. The impugned order is set aside and the case is remitted back to the respondent to pass an appropriate order within 75 days from the date of receipt of a copy of this order - Petition allowed by way of remand.

Summary

Issues involved: Determination of tax liability, imposition of penalty u/s 27(3)(C) of TNVAT Act 2006, violation of principles of natural justice.

Tax Liability Determination:
The respondent determined a tax due of Rs. 71,26,907.00 from the petitioner for the assessment year 2015-2016 under the TNVAT Act 2006. The petitioner, engaged in the sale of batteries, disputed the claim, stating that goods were not imported for trading purposes but were manufactured and sold within Tamil Nadu. The respondent issued show cause notices and passed the impugned order without sufficient basis or consideration of the petitioner's responses.

Imposition of Penalty u/s 27(3)(C) of TNVAT Act 2006:
In addition to the tax liability, a penalty of Rs. 1,06,90,360.00 was imposed on the petitioner for willful non-disclosure of turnover and non-payment of tax, attracting a penalty of 150% on the tax due. The petitioner argued that the order lacked justification and violated principles of natural justice as they were not given a proper opportunity to present their case.

Violation of Principles of Natural Justice:
The petitioner contended that the impugned order was passed without considering their replies and without affording them a fair hearing. The respondent failed to provide necessary details and confirm the demand without proper substantiation, leading to a violation of principles of natural justice.

Judgment:
The High Court found that the impugned order was not sustainable due to procedural irregularities and lack of proper service of notices. The order was set aside, and the case was remitted back to the respondent for re-determination of the taxable returns within 75 days. The respondent was directed to provide detailed information on the alleged imports and CAG Defect Memo, allowing the petitioner to respond. The Court emphasized the importance of expeditious resolution and the right to be heard before passing any new order. As a result, the Writ Petition was allowed, and the connected Miscellaneous Petitions were closed without costs.