2017 (1) TMI 686 - HC - VAT and Sales Tax

Validity of assessment order - natural justice - The grievance of the petitioner is that the second respondent viz. the petitioner s Assessing Officer without issuing any notice and inviting any objections from the petitioner has completed the Assessment under the CST Act for the year 2014-15 - is assessment order valid? Held that - the Assessing Officer is an independent Statutory Authority who has to complete the Assessment by considering the objections raised by the dealer and he cannot be a mouthpiece of the Enforcement Wing or Audit Party. The report submitted by the Audit can at the best be an information to the Assessing Officer which may give a cause of action for issuing a pre-revision notice. After issuance of notice when the dealer submits its objections there is a statutory duty on the part of the Assessing Officer to consider the objections on all aspects and then complete the Assessment by passing a speaking order after affording an opportunity of personal hearing. If the Assessing Officer fails to do so it would amount to abdication of statutory duty cast upon the Assessing Officer which is more than sufficient to set-aside the impugned order. Impugned assessment order is set-aside - petition allowed - matter on remand - decided in favor of petitioner.

Summary

Issues: Violation of principles of natural justice in Assessment under CST Act for the year 2014-15.

In this case, the petitioner, a dealer of various steel and metal products, challenged the Assessment completed by the second respondent under the CST Act for the year 2014-15. The petitioner contended that the Assessment was done without issuing any notice or inviting objections, which violated the principles of natural justice. The petitioner argued that the notice issued did not pertain to the relevant Assessment year, and the Assessment order was solely based on a VAT Audit report. The petitioner further claimed that the reversal of Input Tax Credit (ITC) was erroneous and not in line with the applicable provisions of the TNVAT Act and CST Act. The petitioner also raised concerns about the lack of application of mind in the impugned order, which was considered a repetition of the VAT Audit report. The respondents argued that the petitioner should have filed an appeal before the Deputy Commissioner of Commercial Taxes before approaching the Court through a Writ Petition.

The Court, after considering the arguments from both sides, found merit in the petitioner's contention regarding the violation of principles of natural justice in the Assessment process. The Court noted that the notice issued did not relate to the correct Assessment year, and even if the respondent considered a subsequent letter from the petitioner as a reply, there was a failure to discuss the contentions raised. The Court emphasized that the Assessing Officer must independently consider objections raised by the dealer and cannot solely rely on audit reports. It was reiterated that the Assessing Officer's duty includes considering objections, providing a personal hearing, and passing a speaking order. Failure to do so amounts to a dereliction of statutory duty, warranting the setting aside of the Assessment order.

Consequently, the Court allowed the Writ Petition, setting aside the impugned assessment order. The second respondent was directed to issue a proper notice to the petitioner outlining the allegations and granting time for objections. The Assessing Officer was instructed to provide a personal hearing to the petitioner and redo the Assessment in accordance with the law. No costs were awarded in the matter, and the connected miscellaneous petition was closed.