2019 (3) TMI 1211 - HC - VAT and Sales Tax

Validity of assessment order - exempt from payment of tax or not - TNVAT Act - sufficient opportunity not provided to the petitioner before passing impugned order - principles of natural justice - Held that - Admittedly in the instant case, the petitioner has not sent any objections to the show cause notice sent by the second respondent - Even though the second respondent in their show cause notice has offered the petitioner the right of personal hearing, they have not issued separate notices fixing the date of personal hearing. The objections raised by the petitioner in this writ petition that they are exempted from payment of tax is a vital issue which has to be gone into by the second respondent before passing the final orders - The Hon ble Division Bench of this Court in G.V. COTTON MILLS (P) LTD. VERSUS THE ASSISTANT COMMISSIONER (CT) AVARAYAMPALAYAM ASSESSMENT CIRCLE, COIMBATORE 2018 (3) TMI 1617 - MADRAS HIGH COURT has also held that even if objections are not submitted, the assessee should not be denied the opportunity of personal hearing. In the instant case, no such opportunity was granted to the petitioner. Therefore, this Court is of the considered view that the respondents have violated the principles of natural justice by not affording sufficient opportunity to the petitioner to submit his objection and also denied the opportunity of personal hearing to the petitioner. The matter is remanded back to the second respondent for fresh consideration in accordance with law and the second respondent shall give sufficient opportunity to the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to assessment order under TNVAT Act, 2006 based on exemption from tax for blasting of explosives; Violation of principles of natural justice in passing assessment order without sufficient opportunity for objections and personal hearing.

Analysis:
The petitioner, a registered dealer under the TNVAT Act, 2006, challenged an assessment order claiming exemption from tax due to the business of blasting explosives, exempted under notifications by the Commissioner of Commercial Taxes. The petitioner contended that despite exemption, no annual returns were filed due to the managing partner's illness, leading to insufficient opportunity for objections. The petitioner argued that the exemption under the TNGST Act, 1959 extended to the TNVAT Act, 2006 as per Section 88(3)(i) of the latter. The petitioner emphasized the need for proper consideration of exemption and violation of natural justice principles.

The petitioner's counsel highlighted that the notifications were binding on the respondents as they were not inconsistent with the TNVAT Act, 2006. The petitioner's failure to respond to the show cause notice was attributed to the managing partner's illness, affecting the submission of objections. The counsel referred to a Division Bench judgment emphasizing the right to personal hearing even if objections were not submitted. The petitioner's case rested on the exemption from tax and the denial of adequate opportunity for objections and personal hearing.

In response, the Government Advocate contended that the petitioner had opportunities to raise objections and be heard, but chose to file a writ petition without exhausting appellate remedies under the TNVAT Act, 2006. The respondents maintained that the show cause notice provided chances for objections and personal hearing, which the petitioner did not utilize, opting for the writ petition instead.

The Court observed that the petitioner's exemption claim and the denial of adequate opportunity for objections and personal hearing warranted a fresh consideration by the second respondent. Quashing the assessment order, the Court remanded the matter for reevaluation in compliance with the law, directing the second respondent to afford the petitioner sufficient opportunity for objections and a personal hearing within eight weeks. The judgment emphasized the importance of adhering to natural justice principles in tax assessments, ensuring due process for the parties involved.

In conclusion, the writ petition challenging the assessment order under the TNVAT Act, 2006 was disposed of with directions for a reevaluation process that upholds the principles of natural justice, providing the petitioner with a fair opportunity to present objections and have a personal hearing in the proceedings.