2020 (12) TMI 237 - HC - VAT and Sales Tax

Principles of Natural justice - jurisdiction of Respondent to levy tax only on such transaction of sale or purchase - non application of mind - HELD THAT - As seen from the impugned assessment orders, the respondent has not applied its mind to the VAT Form-201 A filed by the petitioner before the Commercial Tax Department at Gujarat. The respondent has also not applied its mind to the tax invoices enclosed by the petitioner along with the reply dated 19.09.2020. In the impugned order passed by total non application of mind, the respondent has observed that the petitioner had submitted only the annexure details, but, has not submitted the details of the tax paid by the petitioner to the Gujarat Government through their VAT return. However, the petitioner has infact submitted the details sought for by the respondent as per their notice dated 27.08.2020. As seen from the impugned assessment orders, the respondent has not afforded personal hearing to the petitioner before passing of the assessment orders. This Court is of the considered view that the impugned assessment orders have been passed against the petitioner by total non application of mind and by violation of principles of natural justice - matter is remanded back to the respondent for fresh consideration and the respondent shall pass final orders after giving sufficient opportunity to the petitioner - Petition allowed by way of remand.

Summary

Issues:
Challenging assessment orders under Tamil Nadu Value Added Tax Act, 2006 for the years 2014-2015 and 2015-2016.

Analysis:
The petitioner challenged assessment orders passed against them for the years 2014-2015 and 2015-2016 under the Tamil Nadu Value Added Tax Act, 2006. The petitioner contended that the respondent had jurisdiction to levy tax only on transactions within Tamil Nadu and not on sales transactions in Gujarat. The petitioner had submitted documents to the respondent, including Gujarat VAT Form 201 A for August 2014 and CA certificates, in response to a notice issued by the respondent. The respondent, however, passed assessment orders without considering the documents submitted by the petitioner and without affording a personal hearing, despite the petitioner complying with the notice requirements. The respondent claimed that tax invoices related to sales in Gujarat were not provided, but the petitioner had indeed submitted the necessary details. The respondent failed to apply its mind to the documents submitted by the petitioner and did not provide a personal hearing as mandated by a circular. The court found that the assessment orders were passed without proper consideration and in violation of natural justice principles. Consequently, the court quashed the assessment orders and remanded the matter back to the respondent for fresh consideration, emphasizing the need for a personal hearing and adherence to the law within twelve weeks.

This judgment highlights the importance of due process and proper consideration of submitted documents in tax assessment proceedings. It underscores the necessity of affording parties a fair opportunity to present their case and the obligation to follow procedural requirements, including providing a personal hearing as mandated by relevant circulars. The court's decision to quash the assessment orders and remand the matter back to the respondent for reconsideration underscores the significance of upholding principles of natural justice and ensuring a thorough examination of all relevant evidence before making tax assessments.