2021 (3) TMI 288 - HC - VAT and Sales Tax

Violation of principles of natural justice - objections given by the petitioner have not at all been considered and non speaking orders have been passed - Finalization of petitioner's annual returns - impugned orders came to be passed confirming the proposals set out in the pre revision notices - HELD THAT - The impugned orders are liable to be quashed. This is for the simple reason that the objections given by the petitioner have not at all been considered and non speaking orders have been passed. For instance, one allegation made against the petitioner is that there was non reporting of certain sales transactions. The petitioner tried to explain the same by pointing out that even though in the Form I return, they were not indicated, all the details have been properly disclosed in the Annexure II of the Form I return. When such an explanation has been given, it is the duty of the assessing authority to give finding as to whether the said explanation is correct or not. The failure on the part of the assessing authority to take note of the objections raised by the petitioner vitiates the entire proceedings. On this sole ground, the orders impugned in the writ petitions are quashed - The matter is remitted to the file of the second respondent - petition allowed by way of remand.

Summary

Issues:
Reopening of assessments under TNVAT Act for assessment years 2012-13 and 2013-14; Non-consideration of objections raised by petitioner leading to non-speaking orders.

Analysis:
The petitioner's annual returns were finalized under Section 22(2) of the TNVAT Act for the years 2012-13 and 2013-14. Subsequently, following an inspection of the petitioner's business premises, the assessments were sought to be reopened. The petitioner was given pre-revision notice and a personal hearing notice, during which detailed objections were filed. However, the impugned orders confirming the proposals set out in the pre-revision notices were passed without considering the petitioner's objections. The petitioner contended that certain sales transactions were not reported, but explained that all details were disclosed in Annexure II of the Form I return. Despite this explanation, the assessing authority failed to address this point in the impugned orders, rendering them non-speaking.

The High Court observed that the failure to consider the objections raised by the petitioner violated the principles of natural justice. Citing a previous judgment, the Court highlighted the importance of recording reasons by an administrative authority exercising quasi-judicial functions to prevent arbitrariness and ensure fairness in decision-making. The Court emphasized that the assessing authority must give due consideration to the points in controversy and provide clear and explicit reasons for its decisions. In this case, the non-speaking orders failed to meet this standard, leading to the quashing of the impugned orders.

Consequently, the High Court allowed the writ petitions, quashed the impugned orders, and remitted the matter to the second respondent for fresh consideration. The second respondent was directed to issue a fresh hearing notice to the petitioner, hear the petitioner, and pass orders afresh in accordance with the law. No costs were awarded, and the connected miscellaneous petitions were closed.