2019 (3) TMI 1212 - HC - VAT and Sales Tax

Validity of assessment order - revision of assessment - TNVAT Act - According to the petitioner, without issuing any notice, the impugned assessment order has been passed - principles of natural justice - Held that - It is an undisputed fact that the main reason for revision of assessment under Section 27 of the Act by the respondents are that the other end seller has not reported to the respondents the sales made to the petitioner. It is seen from the records that the purchases made by the petitioner from the other end seller have been duly reported to the second respondent by the petitioner without any suppression - this Court is of the considered view that the respondents have violated the principles of natural justice. Hon ble Division Bench Judgement of this Court 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 if the assessee does not ask for a personal hearing, it is mandatory for the assessing officer to grant personal hearing to the dealer/assessee. The matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders, after giving sufficient opportunity to the petitioner to raise all objections available to him under law - petition allowed by way of remand.

Summary

Issues:
Challenge to impugned assessment order under TNVAT Act, 2006 without notice. Applicability of judgment regarding liability of purchaser for non-reporting of sales by seller. Availability of alternative appellate remedy. Violation of principles of natural justice.

Analysis:

Issue 1: Challenge to impugned assessment order without notice
The petitioner challenged the impugned assessment order passed by the second respondent under the TNVAT Act, 2006, alleging that it was done without issuing any notice. The petitioner contended that all purchases were reported to the second respondent and there was no suppression. The petitioner argued that the assessment order was not passed in accordance with the law, leading to the filing of the Writ Petition.

Issue 2: Applicability of judgment on liability of purchaser
The petitioner relied on a judgment of the Hon'ble Division Bench of the Madras High Court in a similar case to argue that the dealer, as a purchaser, cannot be held liable for the non-reporting of sales by the seller. The judgment emphasized that action should be taken against the defaulting seller and not the purchaser. The court found the judgment applicable to the facts of the instant case, supporting the petitioner's contention that the impugned assessment order was not legally sound.

Issue 3: Availability of alternative appellate remedy
The Additional Government Pleader argued that there was an alternative appellate remedy available to the petitioner under Section 51 of the Act, making the Writ Petition not maintainable. However, the court found that the impugned assessment order violated the principles of natural justice, as highlighted by the petitioner. The court referred to a judgment emphasizing the mandatory nature of granting a personal hearing to the dealer/assessee, further supporting the petitioner's case.

Issue 4: Violation of principles of natural justice
The court concluded that the respondents had violated the principles of natural justice by not granting a personal hearing and considering all objections raised by the petitioner. Consequently, the impugned assessment order was quashed, and the matter was remanded back to the second respondent for fresh consideration. The court directed the second respondent to grant sufficient opportunity to the petitioner for raising objections and a right to a personal hearing, with a deadline of eight weeks for passing final orders.

In conclusion, the Writ Petition was disposed of with no costs, and the connected miscellaneous petition was closed, based on the detailed analysis of the issues involved in the legal judgment delivered by the Madras High Court.