2018 (9) TMI 243 - HC - VAT and Sales Tax

Validity of assessment order - it is contended that the present impugned order of assessment passed, based on the instruction received from the higher officials, rejecting the deviation proposal submitted by the Assessing Officer, is not an order passed with independent application of mind - Held that - Both are one and the same and therefore, the said order is squarely applicable to the present case as well. It is stated that the said order has become final and the Revenue has not challenged the same any further - the matter is remitted back to the respondent for passing a fresh order of assessment on merits - Petition allowed by way of remand.

Summary

Issues:
1. Assessment order challenged for tax liability on sale value of flats.
2. Allegation of double taxation and violation of principles of natural justice.
3. Independence of Assessing Officer in passing assessment orders.

Analysis:

Issue 1: Assessment order challenged for tax liability on sale value of flats.
The petitioner contested the assessment order dated 22.06.2018 for the assessment year 2014-15, arguing that tax should only be applicable to the 7 flats constructed during the year, not 24 flats as estimated by the enforcement wing report. The petitioner emphasized that taxing the sale value of flats amounts to taxing immovable property, which is impermissible under the TNVAT Act, 2008. Additionally, the petitioner raised concerns about the Respondent's failure to consider objections and evidence regarding the ownership of unsold plots, indicating a violation of natural justice principles.

Issue 2: Allegation of double taxation and violation of principles of natural justice.
The petitioner further contended that the Respondent's assessment involved double taxation, as tax had already been collected on the transfer of property of goods in works contracts. The manner in which the assessment was conducted was criticized for disregarding the principles of taxation on works contracts and for not adequately considering the petitioner's objections. The petitioner highlighted that the Assessing Officer's decision was influenced by higher officials, rather than being an independent application of mind, leading to an unjust assessment order.

Issue 3: Independence of Assessing Officer in passing assessment orders.
The court emphasized the independence of the Assessing Officer in completing assessments, citing previous judgments where assessments solely based on directions from higher authorities were deemed unsustainable in law. The court reiterated that the Assessing Officer should decide cases based on dealer submissions and produced documents, without being bound by superior directives. The judgment in similar cases underscored the need for Assessing Officers to exercise their statutory power independently, without undue influence from higher officials.

In conclusion, the High Court allowed the writ petition, setting aside the impugned assessment order and remanding the matter back to the respondent for a fresh assessment. The court directed the respondent to conduct the assessment with an independent mind, affording the petitioner a fair opportunity to present their case without influence from higher officials. The court's decision underscored the importance of upholding principles of natural justice and ensuring the independence of Assessing Officers in tax assessments.