2018 (1) TMI 865 - HC - VAT and Sales Tax

Validity of assessment order - principles of Natural Justice - works contract - case of petitioner is that the third respondent did not afford an opportunity of personal hearing, though the revision of assessment has been done under Section 27 of the said Act - Held that - Courts have held that an opportunity of personal hearing is mandatory when revision of assessment is sought to be done under Section 27 of the said Act - In the instant case, apart from levy of tax, there is also an order levying penalty under Section 27(3) of the said Act. Therefore, it is more necessary that an opportunity of personal hearing should be granted and that the opportunity should be an effective opportunity and not an empty formality. The matter is remanded to the third respondent for a fresh consideration - petition allowed by way of remand.

Summary

Issues:
1. Lack of opportunity of personal hearing in the assessment process under Section 27 of the Tamil Nadu Value Added Tax Act, 2006.
2. Failure to consider the petitioner's refund claim and proposing to revise total and taxable turnover without an effective opportunity for the petitioner to present objections.

Analysis:
1. The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, challenged an assessment order due to the absence of a personal hearing by the third respondent. The Proviso to Section 27(2) mandates a reasonable opportunity for the dealer to show cause before reversing input tax credit, which includes a personal hearing. Courts have emphasized the importance of personal hearings in complex assessment proceedings to address factual issues adequately.

2. Previously, the petitioner sought a refund through a writ petition, leading to a direction for the third respondent to consider the refund claim. However, the third respondent requested additional documents and later proposed revising the turnover without providing an effective opportunity for the petitioner to present objections. The court held that the opportunity for a personal hearing should be meaningful and not a mere formality, especially when penalties are involved. The lack of a genuine chance to present objections and the failure to request necessary certificates rendered the assessment order invalid.

3. Consequently, the court allowed the writ petition, setting aside the impugned order, and remanded the matter to the third respondent for a fresh assessment. The third respondent was directed to schedule a personal hearing, listen to the petitioner's authorized representative, and conduct the assessment in compliance with the law. The judgment emphasized the importance of providing a genuine opportunity for dealers to present their case effectively during assessment proceedings.