2024 (4) TMI 219 - HC - VAT and Sales Tax

Requirement to fulfil condition to deposit 15% of the disputed tax demand, to participate in the assessment proceedings - alleged mismatch of purchases between the returns filed by the appellant and the other dealers - HELD THAT - The learned Judge, after having considered the submission made by the learned counsel for the appellant / assessee, has granted one opportunity to the assessee, however subject to a condition that the assessee has to deposit 15% of the tax demanded, by the order impugned herein. According to the learned counsel for the appellant, when the learned Judge is inclined to remand the matter to the respondent for re-consideration, he ought not to have imposed such condition on the appellant, which is illegal and contrary to law. The issue involved herein had already been considered by a Division Bench in Havea Handles Components Pvt. Ltd v. Assistant Commissioner (CT) (FAC), Royapettah II Assessment Circle, Chennai 2014 (7) TMI 1367 - MADRAS HIGH COURT and it was held that It has to be pointed out, at this stage, that once it has been found that the orders impugned in the writ petitions are unsustainable on account of violation of principles of natural justice, it is wholly unnecessary to impose any condition while remitting the matter for fresh adjudication and in the considered opinion of this court, the direction given to the appellant / writ petitioner to deposit 10% of the tax amount as claimed in the demand notice, as a condition precedent to enquire into the matter, is unsustainable and the said portion of the order is liable to be set aside. Following the above said judgment, in an identical case in M/S. R.P.S. CO VERSUS THE ASSISTANT COMMISSIONER (ST) (FAC) BROUGH ROAD CIRCLE, ERODE 2022 (2) TMI 1430 - MADRAS HIGH COURT , this court, in which, one of us (RMDJ) was a member, has set aside the pre-condition imposed on the appellant therein to deposit 30% of the tax amount for consideration of the matter afresh by the assessing authority, observing that the same was certainly unwarranted. This Court is inclined to set aside the order of the learned Judge insofar as directing the appellant / assessee to deposit 15% of the demanded tax as a condition precedent for re-doing the assessment by the authority and the same is accordingly, set aside. Consequently, the appellant / assessee is directed to file objections to the order passed by the respondent treating the same as show cause notice as directed by the learned Judge, within a period of two weeks from the date of receipt of a copy of this judgment - Appeal allowed.

Summary

Issues Involved:
The judgment involves a challenge to an assessment order under the Tamil Nadu Value Added Tax Act, 2006, focusing on the mismatch of purchases between the appellant and other dealers, and the imposition of a condition to deposit 15% of the disputed tax demand.

Issue 1: Assessment Order Challenge
The appellant, a Registered Dealer, challenged the revision of assessment by the respondent for the year 2014-15 due to alleged mismatches in purchases and the imposition of interest under Section 27(3) of the Act. The appellant's objections were not filed, leading to the order dated 28.12.2016, which was challenged in W.P. No. 19222 of 2018. The learned Judge remanded the matter, directing the appellant to file objections, participate in assessment proceedings, and pay 15% of the tax demanded. The appellant contended that the assessing authority should conduct two-way inquiries and not penalize the purchasing dealer for sellers' default, citing relevant case law. The appellant appealed against the condition to pay 15% of the disputed tax demand.

Issue 2: Legal Implications
The Special Government Pleader argued that the appellant failed to file objections to the Revision Notice, justifying the order dated 28.12.2016. The learned Judge's condition to deposit 15% of the disputed tax demand was defended as appropriate. After hearing both sides, the court examined the records meticulously.

Judgment Summary:
The court found merit in the appellant's argument that imposing a condition to deposit 15% of the tax demand while remanding the matter was illegal. Referring to previous judgments, the court emphasized that such pre-conditions were unsustainable and set aside the order directing the appellant to pay 15% of the demanded tax. The appellant was instructed to file objections within two weeks, and the respondent was directed to re-do the assessment and pass appropriate orders in accordance with law. The writ appeal was allowed without costs.