2015 (4) TMI 391 - HC - VAT and Sales Tax

Petitioner's Failure to Avail Appellate Remedy Under TNVAT Act

The court found that the petitioner failed to avail the opportunity granted and must not bypass the appellate remedy available under the TNVAT Act. The ... Opportunity of personal hearing - principles of natural justice - best judgment assessment - deemed assessment under Section 22(2) - revision of assessment under Section 25 - availability of appellate remedyAvailability of appellate remedy - opportunity of personal hearing - The petitioner cannot bypass the statutory appellate remedy and is required to challenge the assessment orders by filing appeals before the appellate authority under the TNVAT Act. - HELD THAT: - The Court found that notices were issued and dates for personal hearing fixed under the Act, the petitioner filed written objections but failed to appear on the initial and adjourned dates despite seeking adjournment which was granted. The authority proceeded to consider the written objections and passed the assessment orders. Given that the petitioner had an opportunity and failed to avail it, the Court held that the writ petitions are not the appropriate forum to bypass the appellate remedy and directed the petitioner to file appeals under the statutory scheme. The Court also observed that if the petitioner considers there are errors in the assessment orders, they may invoke the statutory provisions for their remedy before the tax authorities as available under the TNVAT Act. [Paras 6, 9]Petitioner must challenge the impugned assessment orders by filing appeals before the appellate authority; writ petitions are not a substitute for the statutory appeal.Opportunity of personal hearing - principles of natural justice - There was no violation of the principles of natural justice in passing the assessment orders. - HELD THAT: - The Court examined the factual record and concluded that the authority issued notices under the Act, afforded the petitioner an opportunity to file objections and fixed dates for personal hearing. The petitioner sought and obtained an adjournment but did not appear on the adjourned date. The authority considered the written objections and finalized the assessment. On these facts, the Court held that the failure to afford a hearing was not established and the action of the authority did not contravene principles of natural justice; rather, the petitioner failed to avail the opportunity provided. [Paras 6, 8]No breach of natural justice; assessment orders validly passed after opportunity to be heard was provided and not availed by the petitioner.Best judgment assessment - deemed assessment under Section 22(2) - revision of assessment under Section 25 - The assessments impugned were made under the authority's power to assess to the best of judgment after finding returns incomplete and incorrect (notice under the relevant provision), and the matter was not one of revising a deemed assessment under Section 22(2). - HELD THAT: - The Court noted the distinction between a deemed assessment under Section 22(2) and a best judgment assessment following notice under the provision for assessing incomplete or incorrect returns. The notices issued to the petitioner were under the provision authorising best judgment assessment because the returns were held to be incomplete and incorrect. Accordingly, the contention that the assessments were deemed assessments which could not be revised was not accepted; the proceedings were properly brought under the best judgment assessment mechanism and the consequent assessments were therefore sustainable subject to statutory appellate review. [Paras 7, 8]Assessments were made as best judgment assessments after notice for incomplete/incorrect returns; not barred as revision of a deemed assessment under Section 22(2).Final Conclusion: Writ petitions dismissed; the impugned best-judgment assessments for the four assessment years are not set aside for breach of natural justice, and the petitioner is directed to pursue statutory appeals before the appellate authority; original orders to be returned to the petitioner. Issues:1. Whether the petitioner should be directed to challenge the assessment orders by filing an appeal before the appellate authority.2. Whether the petitioner was afforded a reasonable opportunity of personal hearing before the impugned orders were passed and if the action of the respondent is in violation of principles of natural justice.Analysis:Issue 1:The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged assessment orders for the years 2009-2013. The petitioner was issued notices proposing to reject filed returns as incorrect and incomplete, directing the petitioner to file objections and appear for a personal hearing. The petitioner filed objections but failed to appear for the personal hearing, leading to the authority confirming the proposal and demanding balance tax. The petitioner contended that the assessment was without jurisdiction and challenged the orders through writ petitions. The respondent argued that it was a case of best judgment assessment under Section 22(2), with the dealer given an opportunity to be heard but failing to avail it. The court found that the petitioner failed to avail the opportunity granted and must not bypass the appellate remedy available under the Act. The only remedy available now is to file appeals against the assessment orders or seek corrections under the TNVAT Act.Issue 2:The court considered whether the petitioner was afforded a reasonable opportunity of personal hearing and if the respondent's actions violated principles of natural justice. The petitioner was given notice, the opportunity to file objections, and a date for personal hearing. Despite seeking an adjournment due to the unavailability of their sales tax practitioner, the petitioner did not appear on the rescheduled date. The court held that the petitioner's failure to avail the opportunity granted did not constitute a violation of natural justice. The notices issued were under Section 22(4) of the Act, indicating that the returns were incomplete and incorrect before the best judgment assessment. Consequently, the writ petitions were dismissed, directing the petitioner to file appeals before the appellate authority while returning the original impugned orders and closing connected miscellaneous petitions.