Court grants personal hearing to petitioner in tax dispute, emphasizing natural justice principles.

The court found that the petitioner, engaged in renting service apartments, was entitled to a personal hearing under Section 6(5) of the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981 before determining tax liability and penalty. The court set aside the assessment order, emphasizing the importance of complying with principles of natural justice. The matter was remitted back to the authorities for fresh orders after providing the petitioners with a proper opportunity for a personal hearing. The court left the decision on cross-examination to the discretion of the officer.

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Issues:
1. Compliance with Section 6(5) of the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981 regarding personal hearing before determining tax liability and penalty.

Detailed Analysis:

The petitioner, engaged in the business of renting service apartments, challenged an assessment order demanding tax and penalty under the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981. The petitioner argued that they were not given an opportunity of personal hearing as required under Section 6(5) of the Act. The petitioner requested cross-examination of Enforcement Wing Officers to defend against the tax liability. The court noted that the provision of personal hearing is crucial when penal consequences are involved, and the petitioner's request for cross-examination indicated the necessity of a hearing to comply with principles of natural justice.

The respondent contended that since objections were filed, there was no need for a personal hearing, citing a decision from the Andhra Pradesh High Court. However, the court held that in cases where tax liability and penalty are imposed, the provisions of Section 6(5) mandating a personal hearing must be strictly adhered to. The court distinguished the Andhra Pradesh case, emphasizing that the present situation required a hearing due to the penal consequences faced by the petitioner.

Given the specific request for documents and cross-examination made by the petitioners, the court found it necessary for the respondent department to grant a personal hearing before determining tax liability and penalty. The court set aside the impugned proceedings and remitted the matters back to the authorities for fresh orders after providing personal hearings to the petitioners. The court left the decision on cross-examination to the discretion of the officer, emphasizing the importance of considering such requests on their merits.

In conclusion, the court held that the impugned proceedings lacked compliance with the mandatory provision of personal hearing under Section 6(5) of the Act. The court ordered a fresh determination of tax liability and penalty after affording the petitioners a proper opportunity for a personal hearing. The court did not issue specific directions regarding cross-examination, leaving it to the discretion of the authority to decide based on the merits of the request.

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