Penalty beyond show-cause notice basis set aside for failure to consider objections and fresh adjudication ordered

Penalty under the Tamil Nadu Value Added Tax Act could not be sustained where the revision notices proposed penalty at 50% but the final orders enhanced it to 150% without addressing the petitioner's objections. The mismatch between the notice and the ultimate penalty, together with the failure to consider the objections, rendered the orders unsustainable. The impugned orders were set aside and the matter was remitted for fresh consideration after giving the assessee an opportunity of hearing.

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Issues: Whether the orders levying penalty at 150% could be sustained when the revision notices had proposed penalty only at 50%, and whether the impugned orders were liable to be set aside and the matter remitted for fresh decision.

Analysis: The notices issued under the Tamil Nadu Value Added Tax Act proposed reversal of input tax credit and penalty at 50%, but the final orders enhanced the penalty to 150% without dealing with the objections filed by the petitioner. Since the penalty imposed in the orders exceeded the basis disclosed in the show cause notices, the orders were treated as unsustainable. The procedural defect and the failure to consider objections justified interference and a fresh adjudication by the authority.

Conclusion: The issue was decided in favour of the assessee. The impugned orders were set aside and the matters were remitted to the respondent for fresh consideration after giving an opportunity of hearing.

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