2020 (12) TMI 905 - HC - VAT and Sales Tax

Principles of natural Justice - Non-application of mind - second respondent has observed that no document with regard to the purchase mentioned in the proposal made by the respondents for revision of assessments on the petitioner, has been produced by the petitioner - HELD THAT - This Court is of the considered view that the impugned assessment orders passed by the second respondent are arbitrary and have been passed by total non application of mind - The second respondent ought to have furnished the documents which they are relying upon for passing the impugned assessment orders to the petitioner, as the petitioner has discharged his burden, as per Section 17 of Tamil Nadu Value Added Tax Act, 2006. As seen from the impugned assessment orders, the second respondent has passed the same only on the ground that no document has been furnished by the petitioner with regard to the proposal made by them for revision of assessments. The other ground for passing the impugned assessment orders is that before the Enforcement Wing Officials during their inspection, the petitioner has admitted that he is not having any documents for having effected inter-state sales / purchases and the Enforcement Wing Officials have also submitted their report that the petitioner has indeed effected sales /purchase from other States. It is settled law that there must be an independent assessment made by the second respondent, while passing the assessment orders under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006. The second respondent cannot mechanically accept the findings of the Enforcement Wing Officials in his report submitted to the second respondent. The judgments relied upon by the learned counsel for the petitioner referred to supra will also reveal the fact that the documents seized by the Enforcement Wing Officials from the petitioner must reveal the fact that the sale / purchase comes within the meaning of transaction . Thus, this Court is of the considered view that the impugned assessment orders have been passed by total non application of mind and principles of natural justice has been violated by the second respondent by not affording copies of the documents sought for by the petitioner in his replies - matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on merits and in accordance with law - petition allowed by way of remand.

Issues Involved:
1. Validity of the impugned assessment orders under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006.
2. Alleged suppression of inter-state purchases by the petitioner.
3. Violation of principles of natural justice by the second respondent.
4. Requirement for independent assessment by the second respondent.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Assessment Orders:
The petitioner challenged the impugned assessment orders dated 16.07.2020 for the assessment years 2011-12, 2012-13, 2013-14, and 2014-15, claiming that the orders were passed without independent assessment by the second respondent. The court noted that the second respondent mechanically accepted the report of the Enforcement Wing Officials without applying his mind, which rendered the assessment orders arbitrary and illegal.

2. Alleged Suppression of Inter-State Purchases:
The petitioner contended that they did not make any purchases from other states and that the lorry receipt dated 01.10.2015 pertained only to the receipt of sample greeting cards, not purchase/sale transactions. The court observed that the second respondent failed to provide the petitioner with the documents requested to substantiate the alleged inter-state purchases, thus failing to prove the suppression of purchases.

3. Violation of Principles of Natural Justice:
The petitioner argued that the second respondent violated the principles of natural justice by not supplying the requested documents, which were crucial for the petitioner to defend against the assessment. The court agreed, stating that the second respondent should have furnished the documents relied upon for the assessment, and the failure to do so constituted a violation of natural justice.

4. Requirement for Independent Assessment:
The court emphasized that an independent assessment must be made by the second respondent under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006, and not merely rely on the findings of the Enforcement Wing Officials. Citing previous judgments, the court reiterated that the second respondent must conduct an independent assessment and cannot mechanically accept the Enforcement Wing's report.

Conclusion:
The court quashed the impugned assessment orders for the assessment years 2011-12, 2012-13, 2013-14, and 2014-15, citing total non-application of mind and violation of principles of natural justice. The matter was remanded back to the second respondent for fresh consideration, with instructions to pass final orders on merits and in accordance with the law after providing sufficient opportunity to the petitioner, including a personal hearing and furnishing all relevant documents. The writ petitions were disposed of accordingly, with no costs, and connected miscellaneous petitions were closed.

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