2022 (8) TMI 772 - HC - VAT and Sales Tax

Validity of assessment order - Validity of notice issued - Refund claim alongwith interest - undue and disproportionate reliance upon the report/proposals of the enforcement authorities and not enough independent application of mind by the authority - HELD THAT - While an assessing officer is certainly entitled to refer to the findings and observations of the enforcement authorities, the finalisation of the assessment must be on his own initiative and application of mind - The assessment must be a function of the independent labour of the assessing officer rather than containing mere reference to the materials found by enforcement and their conclusions. Pursuant to the remand, the petitioner has received the impugned notice dated 18.03.2019, calling upon it to file its objections to the assessment proposals with supporting records. Though styled as notice, the impugned communication, conveys as much finality as an order and the petitioner thus apprehends that the officer has pre-determined the issues - seeing as the communication impugned is a notice it would be appropriate for the petitioner to appear before the Authority and make its case. The Assessing Authority will ensure that the proceedings before him are completed in close compliance with the observations and conclusions of the Appellate Authority. Initiation of proceedings of recovery by issuance of Form-U to the Bank - HELD THAT - The appellate order had been received by the Assessing Authority only on 28.02.2017. In the meanwhile, based upon the Form-U issued to the Bank, the Bank had handed over the Demand Draft to the Assessing Authority on 09.12.2016 that had been sent for encashment on 12.12.2016 and encashed on 20.12.2016 - there are no irregularity in the procedure followed. Though the proceedings for recovery are unfortunate seeing as the original order of assessment has been set aside and remanded for de novo consideration, in the preceding paragraphs, a time frame has been set for completion of the proceedings in remand. Thus, and as the conclusion of the de novo proceedings is imminent, mandamus, as sought for, is not issued now. Petition disposed off.

Summary

Issues:
1. Challenge to notice issued by the respondent dated 18.03.2019
2. Mandamus sought for directing the respondent to refund an amount
3. Proper application of mind in assessment by the authority
4. Compliance with appellate authority's directions in assessment process
5. Recovery proceedings initiated before completion of appellate process

Analysis:

1. The petitioner challenged a notice issued by the respondent dated 18.03.2019, and also sought a mandamus for the refund of a specific amount. The assessment under question was framed on 30.09.2016 for the period 2015-2016 under the Tamil Nadu Value Added Tax Act, 2006. The petitioner filed a first appeal before the Appellate Deputy Commissioner, Chennai Central, after paying the statutory pre-deposit of 25% of the disputed tax.

2. The First Appellate Authority remanded the matter to the Assessing Authority, noting that the assessment was not properly framed due to excessive reliance on enforcement reports. The appellate authority emphasized the need for independent application of mind by the assessing officer in finalizing the assessment, as supported by legal precedents such as Jayalakshmi Oil Mills case and others.

3. The detailed order of the appellate authority highlighted the failure of the assessing authority to consider objections and materials filed by the appellant independently. The principles of judicial discipline were emphasized, stressing the importance of unbiased assessment based on merits rather than external reports. The respondent was directed to re-do the stock reconciliation and reassess in accordance with the law.

4. The respondent issued a notice post-remand, reiterating reliance on enforcement proposals, contrary to the directions of the appellate authority. The court emphasized the necessity of adhering to the appellate authority's conclusions and principles of judicial discipline. The petitioner was directed to appear before the Authority and present its case, ensuring compliance with the observations of the Appellate Authority during the proceedings.

5. Regarding the mandamus sought for refund, the court found no irregularity in the recovery procedure initiated before the completion of the appellate process. However, as the assessment proceedings were set for completion within a specified timeframe, the court did not issue the mandamus at that time. Strict adherence to the set timelines by both parties was mandated, with a provision for refund if the assessment proceedings were not completed as directed.

In conclusion, the Writ Petitions challenging the notice and seeking mandamus were disposed of with specific directions for compliance and completion of assessment proceedings within the stipulated timeframe, ensuring adherence to legal principles and judicial discipline.