2021 (6) TMI 142 - HC - VAT and Sales Tax

Validity of assessment order - suo motu invoked his jurisdiction under Section 84 of the Tamil Nadu Value Added Tax Act - no personal hearing was afforded to the petitioner - principles of natural justice - HELD THAT - Since the jurisdiction under Section 84 of Tamil Nadu Value Added Tax Act was suo motu invoked by the assessing authority himself, I must hold that the original orders of assessment dated 28.03.2017 automatically go. As I have already pointed out, the said orders were passed without granting personal hearing to the petitioner. The core contention raised by the learned counsel for the petitioner is that the impugned orders are vitiated by pre-determination. The assessing authority has chosen to go by what transpired during the inspection by the Enforcement Wing Officials. This contention advanced by the petitioner's counsel is amply borne out by the text and language of the impugned orders. In the impugned orders, the assessing authority had stated that since he is a quasi-judicial authority, he will always issue revision notice only after thoroughly going through all the facts and defects pointed out in the inspection records - In the case on hand, one of the defects pertains to non-payment of tax by the other end dealer. In the decision M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER 2017 (3) TMI 536 - MADRAS HIGH COURT it was authoritatively laid down by the Madras High Court that in all such cases of mismatch, the enquiry must be conducted with the other end dealer also. But in the impugned order, it has been mentioned that it is the assessee, who must establish with proof that his seller has paid tax due to the Government. The matters are remitted to the file of the second respondent and the second respondent will issue one more personal hearing notice to the petitioner - Petition allowed by way of remand.

Issues:
1. Jurisdiction under Section 84 of Tamil Nadu Value Added Tax Act invoked by assessing authority.
2. Validity of impugned orders based on pre-determination.
3. Compliance with legal principles in assessment process.
4. Adequacy of assessment officer's consideration of objections.
5. Judicial precedents regarding assessment procedures and enforcement officers' role.

Issue 1: Jurisdiction under Section 84 of Tamil Nadu Value Added Tax Act invoked by assessing authority

The petitioner, an assessee registered with the second respondent, challenged adverse orders passed without a personal hearing. The assessing authority invoked Section 84 of the Act suo motu, reopening proceedings due to lack of personal hearing in the original orders dated 28.03.2017. The High Court held that the original orders automatically stood set aside as they were passed without affording the petitioner a personal hearing, highlighting the vulnerability of the initial orders.

Issue 2: Validity of impugned orders based on pre-determination

The core contention raised was that the impugned orders were vitiated by pre-determination. The assessing authority's reliance on facts from an inspection by Enforcement Wing Officials was questioned. The High Court observed that the assessing authority's approach, emphasizing suppression noted during inspection, was not in line with established legal principles. The authority's failure to consider the petitioner's objections and objections raised in similar cases led to the impugned orders being set aside.

Issue 3: Compliance with legal principles in assessment process

The High Court referenced legal precedents to emphasize the importance of considering objections raised by the assessee and providing valid reasons for assessment decisions. It noted that the assessing officer's approach, solely relying on enforcement officials' reports without due consideration of objections, was incorrect. The Court highlighted the quasi-judicial nature of the assessing officer's role and the need for a fair assessment process that considers all relevant evidence and objections.

Issue 4: Adequacy of assessment officer's consideration of objections

The assessing officer's failure to address the petitioner's contentions and objections adequately was a significant concern. The High Court pointed out that the petitioner was portrayed unfavorably in the impugned orders, with objections summarily dismissed. The Court deemed this approach incorrect and ordered the matters to be remitted to the assessing authority for a fresh consideration, emphasizing the need for a fair assessment process that respects the petitioner's rights.

Issue 5: Judicial precedents regarding assessment procedures and enforcement officers' role

The High Court cited previous judgments to underscore the assessing officer's duty to consider objections and evidence independently, without undue influence from enforcement officials. It highlighted the need for a thorough and fair assessment process that upholds the principles of natural justice and ensures that the assessee's rights are respected. The Court's decision to set aside the impugned orders and remit the matters for a fresh consideration underscored the importance of adherence to legal principles in assessment procedures.

In conclusion, the High Court's judgment in this case focused on upholding the principles of natural justice and fair assessment procedures, emphasizing the assessing authority's duty to consider objections impartially and provide valid reasons for assessment decisions. The Court's decision to set aside the impugned orders and remit the matters for a fresh consideration underscored the importance of a transparent and unbiased assessment process that respects the rights of the assessee.

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