2015 (5) TMI 495 - HC - VAT and Sales Tax

Validity of assessment order - petitioner's Form-S Certificates were not considered by the authority, prior to passing the final order in respect of both assessment years while issuing notices - Held that - Admittedly, in the reply given by the petitioner, he has specifically taken a stand that Contractor has paid the tax due on the contract receipts and reported to the Sales Tax Department through the monthly sales tax returns filed at the Trichy Road Circle, Coimbatore and copies of the monthly returns and Tax receipts were enclosed along with the reply on 21.01.2014. Further, it was stated that the balance amount relates to the purchase of materials for the constructions of buildings, the question of deduction of tax at source does not arise. The petitioner produced a copy of the ledger account and purchase bills along with the reply to the show cause notice. If the respondent had afforded an opportunity of personal hearing to the petitioner, this could have been sorted out then and there and it would have complied with principles of natural justice as well the statutory requirement. In the light of the decision SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai and another, reported in 2008 (9) TMI 914 - MADRAS HIGH COURT , it is necessary for the respondent to afford an opportunity of personal hearing, more particularly, when the petitioner was in possession of Form-S and has specifically stated that the Contractor has paid tax. Further, it is to be noted that the Principal Secretary / Commissioner of Commercial Taxes, Chennai, by circular No.7/2014, dated 03.02.2014, has issued guidelines and circular instructions to be followed while passing orders of assessment or revision of assessment, etc. Clause 3(a)(iii) of the said circular would be relevant for the purpose of this case - impugned proceedings are held to be bad in law - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
Challenging assessment orders for Assessment Years 2007-08 and 2008-09 based on non-consideration of Form-S Certificates by the authority prior to passing the final order.

Analysis:
The petitioner, a registered dealer, challenged the assessment orders for the mentioned years, arguing that the Form-S Certificates were not taken into account by the authority before finalizing the orders. The petitioner contended that the notices issued did not consider the certificates and raised various allegations, including discrepancies in building additions and TDS details. The petitioner submitted objections, stating that the Contractor had paid the tax due and provided supporting documents. However, the opportunity for a personal hearing was not granted, which was crucial for resolving factual disputes as per legal principles.

Further Analysis:
The court referred to a previous case emphasizing the importance of personal hearings in cases involving complex factual disputes. The failure to provide a personal hearing violated principles of natural justice and statutory requirements. The court highlighted a circular by the Principal Secretary/Commissioner of Commercial Taxes, Chennai, mandating personal hearings irrespective of the dealer's choice. The court found the impugned proceedings to be legally flawed due to the absence of a personal hearing and non-compliance with the circular guidelines.

Conclusion:
As a result, the court quashed the impugned proceedings and remanded the matters back to the respondent for fresh consideration. The court directed the respondent to provide a personal hearing to the petitioner, consider the Form-S certificates, and issue fresh orders within eight weeks. Both writ petitions were allowed without costs, and the connected miscellaneous petitions were closed.