2022 (9) TMI 162 - HC - VAT and Sales Tax

Levy of penalty under Section 27(3)(c) of the TNVAT Act - suppression of purchase values - turnover was found to be disproportionate to the return submitted - HELD THAT - Considering the submissions and perusal of materials, it is seen that admittedly, no details given, the counter is silent about the Circular of the Commissioner, dated 24.02.2021, which is primarily issued to follow principles of natural justice. The principles not followed. It is seen that the petitioner has received a show cause notice and due to illness, he was unable to reply to the show cause notice. Hence, the impugned assessment order is passed without hearing the petitioner collecting any particulars. There is no specific allegation that, in Annexure - II of Vendors, certain entries made mismatched with Annexure - I and II of the petitioner's tax returns. It is the duty of the Assessment Officer to give particulars as per the Circular of the Commissioner. In this case, the Commissioner's Circular not followed. Hence, the impugned order is set aside. The respondent is to give the mismatch particulars, so that the petitioner can make his reply, affording personal hearing to the petitioner - Petition allowed.

Summary

Issues: Challenge to revision proceedings initiated under TNVAT Act based on alleged suppression of purchases and imposition of penalty.

In this judgment, the petitioner, a distributor for total gas supplied by Total Energies and a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, challenged the revision proceedings initiated by the respondent based on alleged suppression of purchases. The respondent alleged that the petitioner had suppressed purchases for a significant amount, leading to a disproportionate turnover. The respondent proposed to levy a penalty under Section 27(3)(c) of the TNVAT Act based on a web report. The petitioner contended that the method of estimating the purchase omission was not approved by the court in previous cases. The petitioner also cited a judgment where assessments based solely on web reports were deemed unlawful. Additionally, the petitioner referred to a circular issued by the Commissioner of Commercial Taxes detailing guidelines for assessments based on web reports, which were allegedly not followed in the impugned order.

The petitioner argued that the assessment authority failed to adhere to the procedural requirements of issuing a detailed show cause notice, providing adequate opportunity for objections, and conducting a proper inquiry. The petitioner emphasized the importance of following the principles of natural justice and providing a fair opportunity for the dealer to respond. The petitioner highlighted that the impugned order lacked specific details and failed to follow the guidelines set forth in the circular issued by the Commissioner. The petitioner contended that the impugned order was passed without hearing the petitioner and collecting necessary particulars, thus violating procedural fairness.

The respondent, represented by the Government Advocate, argued that the petitioner had the opportunity to respond to the show cause notice but failed to do so, and subsequently approached the court after the order was passed. The respondent maintained that the impugned order was appealable, and the petitioner should have followed the proper appellate process instead of filing a writ petition. The respondent emphasized the importance of providing detailed turnover information and corresponding entries to support the allegations of suppression.

The court, after considering the submissions and materials, found that the impugned order was passed without affording the petitioner a proper opportunity to respond and without providing specific particulars as required by the Commissioner's circular. The court held that the principles of natural justice were not followed, and the impugned order lacked essential details to support the allegations of mismatched entries. Consequently, the court allowed the writ petition, directing the respondent to provide mismatch particulars to the petitioner for a response, conduct a personal hearing, and pass the assessment order following the Commissioner's circular within two months. No costs were awarded, and connected miscellaneous petitions were closed.