2017 (8) TMI 1021 - HC - VAT and Sales Tax

High Court sets aside tax revision, emphasizes natural justice principles, orders fresh assessment.

M/s. Dalmia Laminators Ltd. Versus The Assistant Commissioner (CT)

The High Court of Madras allowed the writ petition, setting aside the impugned order regarding the revision of Input Tax Credit and imposition of penalty ... Reversal of input tax credit - interstate sale - penalty - principles of natural justice - Held that: - whatever proposal was made in the revision notice, dated 26.10.2016, is deemed to have been superseded, as per the revised revision notice, dated 29.05.2017. Therefore, the respondent can adjudicate only the revised revision notice, dated 29.05.2017 and not the earlier notice, dated 26.10.2016. Hence, that being the position, then, obviously, the respondent should have referred to the petitioner's reply, dated 14.06.2017 - This, having not been done, amounts to serious violation of principles of natural justice - as long as the respondent / Department continues to adopt this age old practice of giving acknowledgment in Letter Delivery Book, whatever the assessee produce as an endorsement before this Court, the Court will be inclined to accept the same as sufficient proof to show that reply was received in the Office of the Assessing Officer. Therefore, the reply, dated 14.06.2017, having been received in the Office of the respondent, the respondent was duty bound to consider the same and should not have passed the impugned order, without even referring to the said reply. Opportunity of personal hearing - Held that: - Opportunity of personal hearing should be afforded, while fixing the date, after the receipt of the objections. This is so, because, if the objections are to the satisfaction of the Assessing Officer, he need not hear the dealer, while dropping the proposal in the revision notice. However, when objections are being made by the dealer and the dealer specifically seeks for an opportunity of personal hearing, the Assessing Officer is bound to fix the date for personal hearing and intimate the same to the dealer and therefore, on that score also, the impugned order is in violation of the principles of natural justice. Matter is remanded back to the respondent for fresh consideration, who shall fix the date for personal hearing - appeal allowed by way of remand. Issues:1. Revision of Input Tax Credit and imposition of penalty under the Tamil Nadu Value Added Tax Act, 2006.2. Violation of principles of natural justice in the assessment process.Analysis:Issue 1: Revision of Input Tax Credit and imposition of penalty under the Tamil Nadu Value Added Tax Act, 2006The petitioner, a registered dealer under the Act, filed monthly returns on time and engaged in the manufacture and sale of HDPE and PP bags within Tamil Nadu and interstate. The petitioner claimed Input Tax Credit for goods transferred to branches outside the state. The respondent issued a revision notice proposing to revise the Input Tax Credit and levy a penalty for alleged non-reversal of ITC on interstate sales during the assessment year 2014-15. The petitioner objected to the revision notice, citing legal provisions and submitted replies. However, the respondent issued a revised revision notice without addressing the objections raised in the petitioner's reply. The Court held that the respondent's failure to consider the objections and issue the revised revision notice without affording an opportunity of personal hearing amounted to a serious violation of principles of natural justice. The Court emphasized that the respondent should have considered the petitioner's reply before passing the impugned order.Issue 2: Violation of principles of natural justice in the assessment processThe Court noted that the respondent's failure to refer to the petitioner's reply dated 14.06.2017 in the assessment process was a violation of principles of natural justice. The Court highlighted the importance of affording the dealer an opportunity of personal hearing after receiving objections to ensure a fair assessment process. The Court emphasized that the Assessing Officer should fix a date for personal hearing if the dealer requests it and consider the objections raised before making a decision. Consequently, the Court set aside the impugned order, remanding the matter back to the respondent for fresh consideration. The respondent was directed to fix a date for personal hearing, consider the petitioner's reply, and re-do the assessment in accordance with the law.In conclusion, the High Court of Madras allowed the writ petition, set aside the impugned order, and emphasized the importance of following principles of natural justice in the assessment process under the Tamil Nadu Value Added Tax Act, 2006.