2002 (10) TMI 767 - HC - VAT / Sales Tax

Assessing officer's lack of independent judgment invalidates assessments and penalties; matter remitted for fresh reassessment after hearing

Madras Granites (P) Ltd. Versus Commercial Tax Officer, Arisipalayam Circle, Salam and another

HC quashed the impugned assessments and the Special Tribunal's confirmations, finding the assessing officer merely adopted a D-3 proposal and followed ... Levy of penalty - surplus turnover - pre-assessment notice including the notice for levy of penalty - HELD THAT:- We find from the records that in D-3 proposal, the Deputy Commissioner (CT), Enforcement, Salem, has not only determined the surplus turnover, but also determined the quantum of penalty that might be imposed on the dealer. Therefore, when the higher officer, viz., the Assistant Commissioner (CT), Enforcement, has directed the assessing officer to complete the assessment on the basis of the proposal in D-3 form, we find that the assessing officer, who is lower in rank in the hierarchy of officers, is bound by the said direction, and the records also show that the assessing officer has not independently applied his mind, but adopted the sales turnover as found in D-3 proposal and also levied the penalty in the manner indicated in D-3 proposal. It is well-settled that the assessing officer is a quasi-judicial authority and in exercising his quasi-judicial function of completing the assessment, he is not bound by the instructions or directions of the higher authorities. We find that in both the matters the assessing officer has acted on the basis of the directions of his higher authority in completing the assessments. We hold that the assessments are not sustainable in law. Accordingly, the orders of assessment in both the matters are liable to be quashed and consequently, the orders of the Special Tribunal confirming the orders of assessment are also liable to be quashed. However, it is open to the assessing officer, viz., the first respondent herein, to pass orders of assessment afresh in accordance with law, after giving an opportunity to the petitioner. Both the writ petitions stand allowed. Issues involved: Challenge to orders of Tamil Nadu Taxation Special Tribunal for assessment years 1997-98 and 1998-99.For the assessment year 1997-98: The premises of the dealer were inspected by the Enforcement Wing of the Commercial Tax Department. Deputy Commissioner (CT), Enforcement, forwarded a proposal (D-3) to the assessing officer for assessment, including determining surplus turnover and penalty. The Assistant Commissioner (CT), Enforcement, directed the assessing officer to complete the assessment based on the D-3 proposal. The assessing officer did not independently apply his mind but followed the directions, leading to unsustainable assessments. The High Court held that the assessing officer, as a quasi-judicial authority, is not bound by higher authorities' directions in completing assessments. The court quashed the assessment orders and the Special Tribunal's confirmation, allowing the assessing officer to reassess in accordance with the law after giving the petitioner an opportunity.For the assessment year 1998-99: Similar to the previous year, the assessing officer relied on the D-3 proposal and directions from higher authorities without independent assessment. The High Court reiterated that the assessing officer must exercise quasi-judicial functions independently, not bound by superiors' directions. Consequently, the court quashed the assessment orders and the Special Tribunal's confirmation, granting the assessing officer the opportunity to reassess following due process.Conclusion: The High Court allowed both writ petitions, quashing the assessment orders for both years and directing reassessment by the assessing officer in compliance with the law, emphasizing the need for independent assessment by quasi-judicial authorities.