2013 (6) TMI 342 - HC - VAT and Sales Tax

Disallowance of exemption on sales return and exempted sales - details regarding the same were not given in the prescribed format - assessee contested against it as when there is no format prescribed under the TNVAT Act for the same - petitioner submitted that the impugned notices of revision of assessment are contrary to the established law and not sustainable because the Enforcement Wing Officer cannot frame the assessment and the D-3 proposals cannot be simply adopted by the respondent without application of mind - Held that - The impugned proposal of the respondent for revision of assessment is subject to the consideration of the objections to be filed by the petitioner and only after receipt of the objections the respondent could form any opinion in accordance with law. The claim of the petitioner that the Enforcement Wing Officers report cannot form the basis for the impugned revision of assessment and he has no role to act as Assessing Officer and the respondent cannot simply adopt the D-3 proposal are all matters for concern before the respondent on filing the objections by the petitioner. At this stage the petitioner stated that the petitioner has already filed objections dated 26.2.2013 before the respondent with regard to the impugned notices these Writ Petitions are disposed of with a direction to the respondent to consider the said objections dated 26.2.2013 filed by the petitioner afford an opportunity of hearing to the petitioner to take a decision uninfluenced by the report of the Enforcement Wing Officers and pass appropriate orders on merits within a period of four weeks from the date of receipt of a copy of this order.

Summary

Issues Involved:
1. Legality of the revision of assessment notices under Section 27 of the Tamil Nadu Value Added Tax Act (TNVAT Act).
2. The role and authority of Enforcement Wing Officers in framing assessments.
3. Compliance with procedural requirements and principles of natural justice.
4. Petitioner's right to claim Input Tax Credit (ITC) and exemptions.

Issue-wise Detailed Analysis:

1. Legality of the Revision of Assessment Notices:
The petitioner-Company challenged the notices of revision of assessment issued under Section 27 of the TNVAT Act for various assessment years. The notices required the petitioner to file objections within 15 days and offered a personal hearing. The petitioner argued that the proposed disallowance of exemptions on sales return and exempted sales was based on the lack of details in a prescribed format, which does not exist under the TNVAT Act. The court noted that Rule 7 of the TNVAT Rules prescribes that the monthly return is to be filed in Form I along with proof of payment of tax. The petitioner had duly filled the columns relating to sales return turnover and exempted sales turnover, which had been accepted by the respondent in the impugned notices. Therefore, the court found that the revision of assessment was not justified on the ground that details were not given in a non-existent prescribed format.

2. Role and Authority of Enforcement Wing Officers:
The petitioner contended that the Enforcement Wing Officers, who inspected their business premises and pointed out certain defects, are not the assessing officers and cannot frame assessments. The respondent had issued the impugned notices based on the Enforcement Wing Officers' report without independently examining the issue. The court emphasized that the Enforcement Wing Officers are not the assessing officers, and the respondent, as a quasi-judicial authority, must make an independent assessment/re-assessment with a fresh mind, uninfluenced by the report of the Enforcement Wing Officers.

3. Compliance with Procedural Requirements and Principles of Natural Justice:
The court highlighted the principles regarding the issuance of notices and the opportunity to be heard. It is a settled legal principle that when a notice is issued with an opportunity to file objections, the person or dealer must avail of this opportunity before approaching the court. The court found that the petitioner had not availed of the opportunity to file objections before the respondent and had hastily filed the writ petitions. The court stated that no grave injustice or infringement of fundamental rights had occurred, and the respondent had rightly offered an opportunity for the petitioner to be heard.

4. Petitioner's Right to Claim Input Tax Credit (ITC) and Exemptions:
The petitioner claimed ITC on the amount of tax paid on the purchase of inputs and capital goods necessary for manufacturing cement tiles. The petitioner argued that the Enforcement Wing Officers' report, which proposed disallowing the entire ITC on local purchases due to non-production of original purchase invoices, was incorrect. The petitioner had maintained all accounts and was ready to produce them for examination. The court directed the respondent to consider the petitioner's objections, afford a hearing, and take a decision uninfluenced by the Enforcement Wing Officers' report.

Conclusion:
The court disposed of the writ petitions with a direction to the respondent to consider the objections filed by the petitioner, provide an opportunity for a hearing, and make a decision based on the law within four weeks. The court emphasized that the respondent must act independently and not be influenced by the Enforcement Wing Officers' report.