2017 (3) TMI 1110 - HC - VAT and Sales Tax

Court orders fresh assessment for dealer challenging VAT Act, citing lack of hearing, purchase discrepancies.

The court found in favor of the petitioner, a registered dealer challenging assessment orders for multiple years under the Tamil Nadu Value Added Tax Act. ... Right to personal hearing - Principle of natural justice - Contemporanea expositio of departmental circular - Reliance on web reports and duty to disclose the report - Remand for fresh assessment after affording hearingRight to personal hearing - Principle of natural justice - Contemporanea expositio of departmental circular - Failure to fix and communicate a date for personal hearing after the assessee specifically requested one amounted to violation of the principles of natural justice. - HELD THAT: - The assessing authority's show cause notice informed the petitioner that an opportunity of being heard could be availed within 15 days but did not communicate any specific date for personal hearing. The petitioner thereafter requested personal hearing by letters dated 31.12.2016 and 11.01.2017. The Department's circular of 20.04.2001 provides that personal hearing need not be given unless the assessee asks for it, but when an assessee specifically requests personal hearing a reasonable opportunity to be heard must include that personal hearing. The Division Bench decision in SRC Projects Private Limited (reported in (2010) 33 VST 333 (Mad)) treats the departmental circular as contemporanea expositio and holds that a specific demand for personal hearing requires that reasonable opportunity to show cause should include personal hearing. Applying that principle, the court found that the assessing authority's failure to fix and communicate a hearing date, and proceeding to pass assessment, was not in strict compliance with natural justice. [Paras 9, 10, 11]Impugned assessment orders set aside and matter remitted to assessing authority to pass fresh assessment after giving an opportunity of personal hearing to the petitioner.Reliance on web reports and duty to disclose the report - Remand for fresh assessment after affording hearing - Use of departmental web reports in assessment requires adherence to procedural safeguards and cannot be relied upon without following directions; matter remitted for fresh consideration including compliance with directions in W.P.No.105 of 2016. - HELD THAT: - The assessing authority relied upon web reports to reach conclusions about purchase mismatches. The court did not decide the correctness of those conclusions on merits but observed that reliance on web reports engages principles of fair procedure and that directions issued in W.P.No.105 of 2016 (and batch) prescribe the procedure to be followed when such reports are used. Since the assessment is being set aside for lack of personal hearing, the court remitted the matter and directed that on fresh assessment the authority must consider all objections, follow the court's directions in W.P.No.105 of 2016 regarding use of web reports, and afford the petitioner an opportunity to raise all grounds. [Paras 12, 13]Assessment remitted for fresh order after giving personal hearing and following directions in W.P.No.105 of 2016 regarding use of web reports.Final Conclusion: Writ petitions allowed; impugned assessment orders for the assessment years 2010-2011 to 2014-2015 are set aside and remitted to the assessing authority for fresh assessment after affording the petitioner personal hearing and complying with the directions in W.P.No.105 of 2016; exercise to be completed within eight weeks of receipt of this order. Issues:Challenging assessment orders for multiple years due to lack of personal hearing opportunity and mismatch in purchase figures leading to impugned assessment orders.Analysis:The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged assessment orders for the years 2010-2015, alleging violation of natural justice principles as no personal hearing was granted despite requests. The respondent claimed discrepancies in purchase figures between profit/loss accounts and monthly returns, relying on web reports. The petitioner sought a personal hearing, citing the circular issued by the Department and relevant case laws. The respondent argued that a show cause notice was given, and orders were passed after considering the petitioner's reply.The court noted that the petitioner was not informed of the date for personal hearing, despite specific requests in their letters. Referring to a circular, the court emphasized the importance of granting a personal hearing when requested by the assessee. Citing a Division Bench decision, it held that fairness in procedure mandates providing personal hearing upon request. The court found the assessing authority's failure to communicate the date for a hearing as a violation of natural justice, ordering a fresh assessment with a personal hearing opportunity.Additionally, the petitioner contested the assessment based on web reports, arguing that details were not provided, referencing a judgment. The court, inclined to set aside the assessment, allowed the petitioner to raise all grounds before the assessing authority, emphasizing consideration of objections and adherence to procedural directions from a previous case. Consequently, all writ petitions were allowed, assessment orders set aside, and the matter remitted for a fresh assessment with a personal hearing and procedural compliance within eight weeks.