2022 (7) TMI 1 - HC - VAT and Sales Tax

Validity of assessment order - assessment orders have been challenged in these writ petitions instead of filing Statutory Appeal before the Appellate Authority under Section 51 of TN VAT, 2006 - HELD THAT - The facts on record seems indicate that there was surprise inspection conducted at the petitioner's place of business and the petitioner's sister concern namely, M/s.V.V.V Edible Oils Limited on 24.10.2014 to 27.10.2014 and certain irregularities and omission were noticed. Though it sought to be explained by the petitioner that the petitioner and the aforesaid petitioner's sister concern were sharing a common godown and that inadvertently and by oversight gingelly seeds issued for production from the aforesaid Godown to the factory of the petitioner's sister concern with the delivery challans of the petitioner. Thereafter, D3 report was forwarded by the Enforcement Wing based on which, revision notices dated 02.08.2018 were issued to the petitioner. Apart from these notices similar notice were not only issued for the Assessment Years 2013-14 and 2014 -15 but also for the Assessment Years 2009-10 2012-13 on 29.07.2016. The petitioner asked the first respondent to appoint the Joint Commissioner vide representation dated 06.09.2018 which was not resulted in any favourable orders. The provision of TNVAT Act, 2016 does not contemplate the appointment of an Arbitrator to look into correctness or otherwise of the revision notices issued for reversing the deemed assessment order. Therefore, there are no merits in the present writ petition. The petitioner should have filed a reply to the revision notices on merits and awaited for final orders. Instead, the petitioner resorted to dilatory tactics with request to appoint a Joint Commissioner. The case remitted back to the second respondent. The petitioner shall file reply if any to the revision notices dated 02.08.2018, within a period of 30 days from the date of receipt of a copy of this order - petition allowed by way of remand.

Summary

Issues Involved:
1. Legality of the assessment orders dated 16.09.2019.
2. Request for appointment of a Joint Commissioner to arbitrate the reassessment proceedings.
3. Compliance with principles of natural justice.
4. Validity of the procedure followed by the assessing officer.

Issue-wise Detailed Analysis:

1. Legality of the assessment orders dated 16.09.2019:
The petitioner challenged the assessment orders for the years 2013-2014 and 2014-2015, arguing that these were passed without awaiting the disposal of their request for appointing a Joint Commissioner. The court noted that the petitioner had sought the appointment of a Joint Commissioner to arbitrate the legality of the reassessment notices issued following an inspection by the Enforcement Directorate. Despite this, the second respondent proceeded with the assessment orders, leading to the petitioner's contention that these orders should be quashed.

2. Request for appointment of a Joint Commissioner to arbitrate the reassessment proceedings:
The petitioner argued that the reassessment notices were inflated and that a Joint Commissioner should be appointed to arbitrate, as was done in a similar case involving Tvl. Madras Cements Limited. The petitioner cited the shared use of a godown with M/s. V.V.V. & Sons Edible Oils Limited and the use of their delivery challans for transporting oil seeds as reasons for the alleged irregularities. The court, however, found no provision in the TNVAT Act, 2016 for appointing an Arbitrator to review the revision notices and deemed this request as a dilatory tactic.

3. Compliance with principles of natural justice:
The petitioner cited several precedents, including *Madras Granites (P) Limited vs. Commercial Tax Officer* and *Mahadayal Premchandra vs. Commercial Tax Officer, Calcutta*, to argue that the assessing officer must independently apply their mind and not merely follow higher authority's directions. The court acknowledged these principles but found that the petitioner had not filed a reply to the revision notices on merits and instead sought an Arbitrator's appointment, which was not legally supported.

4. Validity of the procedure followed by the assessing officer:
The court noted that the petitioner failed to appear for personal hearings and did not submit a reply on merits to the revision notices. The court emphasized that the assessing officer should have informed the petitioner about the hearing and the decision to proceed without appointing an Arbitrator. The court found procedural lapses in issuing the impugned assessment orders without proper notice to the petitioner.

Conclusion:
The court quashed the impugned assessment orders dated 16.09.2019 and remitted the case back to the second respondent. The petitioner was directed to file a reply to the revision notices dated 02.08.2018 within 30 days, and the second respondent was instructed to pass a speaking order on merits within 60 days. The impugned assessment orders were to be treated as corrigenda to the revision notices. The writ petitions were disposed of with these observations, and no costs were awarded.