1995 (7) TMI 403 - HC - VAT and Sales Tax

High Court Upholds Assessing Authority's Discretion on Show Cause Notice

The appeal was dismissed by the High Court, upholding the assessing authority's discretion to issue a show cause notice under section 16(1) of the Tamil ... - Issues:Challenge to show cause notice under section 16(1) of the Tamil Nadu General Sales Tax Act, 1959 based on alleged pre-conceived notions by the assessing authority.Analysis:The appeal was filed against the order of the learned single Judge, who dismissed the writ petition challenging the show cause notice issued under section 16(1) of the Act. The notice detailed the business activities, inspections conducted, and proposed revisions based on inspection findings. The appellant alleged that the assessing authority had pre-conceived notions, leading to a biased notice. The Division Bench of the Gujarat High Court's decision in Ashwin Industries was cited, emphasizing that assessment revision can be done for 'any reason.' The single Judge upheld the assessing authority's discretion to revise assessments and rejected the argument of presumptions without evidence. However, during the appeal, the appellant's counsel referenced a contradictory ruling in Madurai Metal Industries, claiming the notice was flawed due to pre-conceived notions. The Court examined the notice and the Division Bench's judgment, concluding that the notice only contained proposals and did not reflect bias or pre-conceived ideas.Under section 16 of the Act, if any part of a dealer's turnover has escaped assessment, the assessing authority can revise it within five years. The authority must provide reasons for concluding that turnover was not assessed and give the dealer a chance to respond. The notice must disclose the reasons for the prima facie conclusion to enable the dealer to contest the proposals effectively. Merely stating facts is insufficient; the reasons prompting the assessment revision must be articulated. The Court found that the assessing authority in this case had followed the necessary procedures and had not displayed any pre-conceived notions. The judgment of the Division Bench was deemed irrelevant to this case's circumstances. Consequently, the writ appeal was dismissed, with no costs incurred.This judgment clarifies the importance of providing detailed reasons in show cause notices for assessment revisions under section 16 of the Act. It highlights that assessing authorities must not have pre-conceived notions and should allow dealers a fair opportunity to contest proposed revisions. The Court's decision underscores the need for transparency and procedural fairness in tax assessment processes to uphold the principles of natural justice and prevent arbitrary actions by authorities.