2019 (3) TMI 1021 - HC - VAT and Sales Tax

Validity of assessment order - compounded rate of tax - Section 8(1)(a) of the Tamil Nadu Value Added Tax Act, 2006 - principles of natural justice - Held that - In the instant case, no personal hearing was granted to the petitioner, eventhough a specific request was made by the petitioner, in his reply dated 04.01.2016. It is well settled that personal hearing will have to be granted to the assessee under the Tamil Nadu Value Added Tax Act, 2006 as held by the internal circular bearing circular No.7 of 2013 of the Principal Commissioner of Commercial Tax. The Hon ble Division Bench of this Court has held in the case of G.V.Cotton Mills (P) Limited Vs. The Assistant Commissioner (CT) 2018 (3) TMI 1617 - MADRAS HIGH COURT has held that even though personal hearing is not sought for by the assessee, it is mandatory on the part of the respondent to grant a personal hearing. The matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders, after giving sufficient opportunity of hearing to the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to impugned assessment order based on one day sales turnover, violation of principles of natural justice, non-consideration of objections and authorities cited by petitioner, lack of personal hearing.

Analysis:

1. Challenge to Impugned Assessment Order:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged the assessment order passed by the respondent based on one day sales turnover exceeding the threshold for compounded tax rate eligibility. The petitioner argued that estimating total taxable turnover solely on one day's sales is not accurate, citing the fluctuating nature of sales in the restaurant business. The court agreed with the petitioner's contention, emphasizing that one day sales turnover cannot be the sole basis for assessing total taxable turnover. The court referenced judgments supporting this view and quashed the assessment order, remanding the matter back to the respondent for fresh consideration.

2. Violation of Principles of Natural Justice:
The petitioner contended that the objections raised were not duly considered by the respondent in the impugned assessment order. Additionally, the petitioner claimed that they were not given sufficient opportunity to present all objections, alleging a violation of the principles of natural justice. The court noted that the objections regarding assessment based on one day sales were not adequately addressed by the respondent. It emphasized the importance of considering objections raised by the assessee and granting a right to a personal hearing, as mandated by relevant legal provisions and judicial precedents.

3. Non-Consideration of Objections and Authorities:
Despite the petitioner citing various authorities in support of their case, the court observed that these authorities were not duly considered by the respondent in the assessment order. The court highlighted the failure to address the petitioner's objections and the lack of consideration given to the legal authorities presented. This non-consideration of relevant objections and authorities further strengthened the court's decision to quash the assessment order and remand the matter for fresh consideration.

4. Lack of Personal Hearing:
The petitioner had requested a personal hearing in their reply, but the same was not granted by the respondent during the assessment process. The court emphasized the mandatory nature of granting a personal hearing to the assessee under the Tamil Nadu Value Added Tax Act, as supported by internal circulars and judicial decisions. The court reiterated that even if a personal hearing is not explicitly sought by the assessee, it is incumbent upon the respondent to provide such an opportunity. In this case, the failure to grant a personal hearing further contributed to the decision to set aside the assessment order.

In conclusion, the High Court of Madras quashed the impugned assessment order, directing the respondent to reconsider the matter, provide a personal hearing, and pass final orders within a specified timeframe. The court's decision aimed to uphold the principles of natural justice, ensure proper consideration of objections and legal authorities, and rectify the deficiencies in the assessment process.