2019 (3) TMI 509 - HC - VAT and Sales Tax

Principles of natural justice - opportunity of personal haring not provided - case of petitioner is that the respondents have not afforded adequate opportunity and have also not conducted proper enquiry - TNVAT Act - Held that - As seen from the provisions of Section 22 r/w Section 27 of the TNVAT Act, 2006, adequate opportunity will have to be granted to the petitioner before any adverse order is passed against them. This Court in an earlier judgment has interpreted the word reasonable opportunity found in Section 27 to mean and include the right of personal hearing. In the instant case, no such opportunity was given by the respondents before passing the impugned order. Therefore, this Court is of the considered view that the respondents have violated the principles of natural justice by not affording adequate opportunity to the petitioner. The matter is remanded back to the respondents to redo the assessment afresh after giving adequate opportunity to the petitioner including the right of personal hearing and pass final orders in accordance with law - petition allowed by way of remand.

Summary

Issues:
Challenging proceedings of the second respondent in TIN. 33526232395/2012-2013 and seeking a direction for a fresh assessment with adequate opportunity.

Analysis:
The petitioner, previously involved in a pharmaceutical business as 'M/s.Meenakshi Medical Agency,' closed it in March 2012. Subsequently, the petitioner and his sons continued the pharmaceutical business as a partnership firm named 'M/s.Jagathish Pharmaceuticals.' Despite the closure of M/s.Meenakshi Medical Agency, the petitioner reported nil turnover for the assessment year 2012-2013 to the second respondent.

The issue arose when the second respondent alleged an unreported sales turnover to Sri Muthu Vinayaga Pharmaceuticals and proposed tax and penalty. The petitioner clarified that the mistake occurred due to reporting the Tin Number of the closed M/s.Meenakshi Medical Agency instead of M/s.Jagathish Pharmaceuticals, from where the purchases were made. The petitioner promptly responded to the allegation with relevant documents.

The petitioner contended that the second respondent erroneously stated in the assessment order that no objection was filed earlier, whereas the petitioner had submitted a reply addressing the mistake. The petitioner argued that if the reply was considered, the tax and penalty proposal would have been dropped. The petitioner emphasized the lack of adequate opportunity and proper inquiry by the respondents, violating the TNVAT Act, 2006 provisions.

The Court acknowledged the petitioner's submission of evidence regarding the mistake and non-consideration of objections in the assessment order. It highlighted the requirement of granting adequate opportunity before passing adverse orders, including the right to a personal hearing. The Court found that the respondents failed to afford such opportunity, thereby violating principles of natural justice.

The Court, noting that the petitioner had already paid the tax and penalty, upheld the writ petition. The impugned proceedings were quashed, and the matter was remanded to the respondents for a fresh assessment with proper opportunity, including a personal hearing, within six weeks. The Court emphasized the importance of adherence to legal procedures and principles of natural justice in such matters.