Retrospective tax assessment challenged: court directs statutory reconsideration with hearing and reasoned order instead of quashing

Retrospective reassessment under the Tamil Nadu Value Added Tax Act was not quashed where the assessee claimed supporting documents existed but had not produced them earlier or sought a hearing. The Court found that the assessing authority had also not insisted on substantial evidence before finalising the assessment. Instead of setting aside the orders, the assessee was permitted to invoke the statutory remedy under Section 84, with the authority directed to verify the documents, grant a personal hearing, and pass a speaking order on merits. Coercive recovery was stayed until that decision.

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Issues: Whether the impugned assessment orders should be quashed, or the assessee should be granted an opportunity to place documents before the assessing authority under the statutory remedy.

Analysis: The assessments were reopened retrospectively from 2009-10, while the assessee claimed that manufacture of detergent powder commenced only from October 2014 and that supporting documents were available. The Court found that, although the assessee had not produced the documents earlier and had not sought a personal hearing, the assessing authority also had not required substantial evidence before finalising the assessment. In these circumstances, instead of quashing the assessment orders, the Court considered it appropriate to permit the assessee to invoke the remedy under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, with supporting documents, and directed the authority to verify the same, grant personal hearing, and pass a speaking order on merits.

Conclusion: The impugned assessment orders were not quashed. The assessee was permitted to seek relief under Section 84, and coercive recovery was stayed until the authority passed orders on the petition.

Ratio Decidendi: Where retrospective tax assessments are challenged and the assessee claims to possess material documents supporting its stand, the Court may decline to quash the assessment but direct consideration of the assessee's statutory application with an opportunity of personal hearing and a reasoned order on merits.

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