2022 (3) TMI 4 - HC - VAT and Sales Tax

Violation of principles of natural justice - the reply to a question posed by this Court as to why the petitioner has chosen to file writ petition under Article 226 of the Constitution of India instead of preferring an appeal, has not been considered or it has not been considered in proper perspective - HELD THAT - Though it was contended by the learned Senior Counsel appearing for the petitioner that, the detailed reply given by the petitioner dated 22.11.2021 has not at all been considered or not been considered in proper perspective by the respondents, on a perusal of the impugned orders, this Court finds that, there has been some consideration in respect of the defence taken by the petitioner through his reply dated 22.11.2021 item-wise. Therefore, it cannot be stated that the assessing authority has passed the impugned assessment orders without considering the reply given by the petitioner dated 22.11.2021, as the said reply has been cited as Reference No.6 in the impugned orders itself and the main issue of stock transfer has also been considered by the respondents in the impugned orders. These are all not the cases to be considered as cases where the assessment orders are passed by the assessing authority without giving any proper opportunity to the petitioner by thus following the principles of natural justice. Instead, these are all the cases where there has been consideration on the part of the respondents - on factual matrix whether the consideration is not enough to be accepted by the petitioner that it has been a proper consideration by meeting each and every fine and minute detail of the factual matrix, that aspect necessarily has to be gone into by the appellate authority and not by this Court exercising its extraordinary jurisdiction under Article 226 of the Constitution of India. The impugned orders, for the reasons stated in the affidavit, and the arguments advanced by the learned Senior Counsel are not liable to be interfered with at this stage - petition dismissed.

Summary

Issues Involved:
Assessment orders under Section 27 of the TNVAT Act, 2006 challenged in writ petitions under Article 226 - Consideration of detailed reply by petitioner - Stock transfer issue - Principles of natural justice - Statutory conditions for appeal - Appellate authority's discretion in imposing further conditions - Judicial review under Article 226.

Analysis:

Assessment Orders under TNVAT Act:
The writ petitions challenged assessment orders for various assessment years under Section 27 of the TNVAT Act, 2006. The main issue revolved around the stock transfer of goods manufactured in Tamil Nadu to Pondicherry, followed by interstate sales to Tamil Nadu buyers, allegedly to evade higher local sales tax. The petitioner contended that the orders violated natural justice principles due to inadequate consideration of their detailed reply.

Consideration of Petitioner's Reply:
The petitioner's counsel argued that the lengthy reply submitted by the petitioner was not properly considered in the impugned orders, leading to a request for writ petitions instead of appeals. However, the Additional Government Pleader asserted that the objections were adequately addressed, especially concerning the stock transfer issue. The court noted that the assessing authority had considered the petitioner's reply item-wise and addressed the main issue in the impugned orders.

Statutory Conditions for Appeal:
The Senior Counsel highlighted the financial burden imposed on the petitioner if they were to appeal, as per statutory conditions requiring payment of 25% of the demand, potentially escalating to 50% with additional conditions for stay of demand. This financial strain was deemed excessive and burdensome by the petitioner.

Judicial Review and Appellate Authority's Discretion:
The court acknowledged the consideration given by the assessing authority and emphasized that the adequacy of such consideration should be determined by the appellate authority, not the court in an Article 226 jurisdiction. To address concerns regarding the financial burden of appeals, the court indicated a precedent where a cap was placed on additional conditions beyond the statutory 25% payment during the appeal process.

Court's Decision and Directions:
Ultimately, the court dismissed the writ petitions, stating that the impugned orders did not warrant interference at that stage. The petitioner was granted the option to appeal before the appellate authority, with a directive to comply with the statutory payment of 25% of the demand. The court also restricted the appellate authority from imposing further conditions during the appeal process, emphasizing a timely resolution within three months from the appeal's initiation.

Conclusion:
The judgment highlighted the importance of statutory compliance in appeals, the discretion of the appellate authority in imposing additional conditions, and the limited scope of judicial review under Article 226. The court's directions aimed to balance the petitioner's rights with the statutory requirements, ensuring a fair and efficient appeal process while addressing concerns of financial burden and procedural fairness.