2015 (9) TMI 1760 - HC - VAT and Sales Tax

Violation of principles of natural justice - no opportunity was given to the petitioner before passing the impugned order - HELD THAT - In view of the fact that the petitioner was not provided with an opportunity of personal hearing before passing the impugned order, coupled with the fact that the respondent department has not followed the statutory provisions provided under the Act and also in view of the Judgment of this Court in TVL SUPREME INDUSTRIES LTD. VERSUS AUTHORITY FOR CLARIFICATION AND ADVANCE RULING, CHEPAUK, CHENNAI AND ANOTHER 2013 (1) TMI 691 - MADRAS HIGH COURT , the impugned order is liable to be set aside and the matter has to be remitted back to the 1st respondent for passing orders afresh. The impugned order of the 1st respondent dated 02.09.2015 is set aside and the matter is remitted back to the 1st respondent for passing appropriate orders, after affording an opportunity of personal hearing to the petitioner - Petition disposed off by way of remand.

Summary

Issues:
Challenge to order of 1st respondent under TNVAT Act for rate of tax on Sand Lime Bricks, violation of principles of natural justice in passing order without hearing, interpretation of Section 48A of TNVAT Act and Rule 12A of TNVAT Rules, application of relevant case law on opportunity of hearing before rejecting application.

Analysis:
The writ petition challenged the order of the 1st respondent regarding the rate of tax on Sand Lime Bricks, seeking a reconsideration after a personal hearing as per Section 48A of the TNVAT Act and Rule 12A of the TNVAT Rules. The petitioner, engaged in manufacturing Sand Lime Bricks, reported a turnover taxable at 5%, but the respondent contended it should be taxed at 14.5%. The petitioner's plea for clarification was rejected without a personal hearing, leading to the argument of violation of natural justice principles.

The petitioner's counsel argued that under Section 48A of the TNVAT Act and Rule 12A of the TNVAT Rules, an opportunity of being heard is mandatory before rejecting an application. Citing a relevant judgment, the counsel emphasized the necessity of providing a personal hearing before rejecting an application seeking clarification on tax rates. The court examined the statutory provisions of Section 48A and its proviso, emphasizing the requirement of a reasonable opportunity of being heard before rejecting an application.

Additionally, Rule 12A of the TNVAT Rules was analyzed, which outlines the procedure for seeking clarification on tax rates. The rule mandates that no application should be rejected without giving the applicant a reasonable opportunity of being heard. The court noted the failure to adhere to these provisions and the importance of following due process in such matters.

Considering the arguments presented and the legal provisions discussed, the court held that the impugned order was set aside due to the lack of a personal hearing and non-compliance with statutory provisions. The matter was remitted back to the 1st respondent for fresh orders, with directions to provide the petitioner with an opportunity of personal hearing within a specified timeframe. The judgment highlighted the significance of following procedural fairness and statutory requirements in tax-related matters to ensure justice and adherence to legal principles.