2012 (12) TMI 851 - HC - VAT and Sales Tax

Revised assessment orders u/s 27(1)(a) of the Tamil Nadu Value Added Tax Act 2006 - assessee contested against non providing of opportunity of hearing in terms of Section 40(2) - Held that - Keeping in view the nature, scope and consequences of direction under sub-rule (7) of Rule 633 of the Excise Manual as decided in Kesar Enterprises Limited v. State of Uttar Pradesh 2012 (12) TMI 828 - SUPREME COURT the principles of natural justice demand that a show-cause notice should be issued and an opportunity of hearing should be afforded to the person concerned before an order under the said Rule is made, notwithstanding the fact that the said Rule does not contain any express provision for the affected party being given an opportunity of being heard. If the requirement of an opportunity to show cause is not read into the said Rule, an action thereunder would be open to challenge as violative of Article 14 of the Constitution of India on the ground that the power conferred on the competent authority under the provision is arbitrary. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial as decided in Sahara India (Firm) v. CIT 2008 (4) TMI 4 - SUPREME COURT - matter remitted to the first respondent for fresh disposal on merits after providing an opportunity of hearing to the petitioner before deciding the revision of assessment.

Summary

Issues:
Challenging assessment orders under Section 27(1)(a) of TNVAT Act for lack of hearing opportunity before imposing penalty.

Analysis:
The petitioner filed writ petitions challenging assessment orders passed under Section 27(1)(a) of the Tamil Nadu Value Added Tax Act, 2006, alleging a violation of the opportunity of hearing provision under Section 40(2) of the TNVAT Act. The petitioner contended that the assessing authority revised the assessments without providing a hearing opportunity, especially when the revision notices included both revision and penalty imposition aspects. The petitioner argued that Section 40(2) mandates a hearing before imposing penalties. The respondents' counsel agreed to remit the penalty portion for reconsideration. However, the court rejected this approach, emphasizing that revision and penalty proceedings cannot be separated when they relate to a common issue. The court cited the Supreme Court's ruling in Kesar Enterprises Limited v. State of Uttar Pradesh, emphasizing the necessity of a hearing before imposing penalties, even if not explicitly provided in the statute, to uphold principles of natural justice and Article 14 of the Indian Constitution.

The court, considering the legal principles and consequences outlined in the Supreme Court judgment, concluded that the petitioner was entitled to a hearing opportunity as per Section 40(2) of the TNVAT Act. The court set aside the impugned proceedings and remitted the matter to the assessing authority for fresh disposal after providing the petitioner with a hearing opportunity. The petitioner's willingness to cooperate for an early resolution was noted, and the writ petitions were allowed by way of remand, with no costs imposed.