2017 (10) TMI 882 - HC - VAT and Sales Tax

Court orders fresh assessment, emphasizes natural justice principles.

The Court allowed the Writ Petitions, set aside the impugned assessment orders, and remanded the matter to the respondent for fresh consideration. The ... Validity of assessment order - penalty u/s 9(2) of the CST Act - Held that: - the respondent has found fault with the petitioner in having produced the letter from the buyers, rectifying the defects in Form C. The petitioner explained that the defect has occurred on account of the purchasing dealer, and it is they, who have to rectify the defect. In that regard, the petitioner produced a letter from the dealer. Further, the petitioner explained that, however, had opportunity been granted to them, they would have been in a position to produce records to show that, whatever turnover, which was not reported in the return as transit sale, were assessed to tax and requisite amount of tax has already been paid. There has been violation of principles of natural justice, and the petitioner did not have adequate opportunity to putforth their plea in spite of specific request made to the respondent for being heard in person. This Court is convinced that the matter should be remitted back to the Assessing Officer for redoing the assessment in accordance with law - petition allowed by way of remand. Issues:Challenge to assessment orders under CST Act for the years 2014-2015 / 2013-2014, Allegations of suppressed transit sales turnover, Allegations of wrongly claimed exemption under Section 6(2) of the CST Act, Proposal to levy penalty under Section 9(2) of the CST Act, Violation of principles of natural justice.Analysis:Challenge to Assessment Orders:The petitioner, a registered dealer under the TNVAT Act and CST Act, challenged the assessment orders for the years 2014-2015 / 2013-2014. The respondent alleged suppression of transit sales turnover and wrongly claimed exemption under Section 6(2) of the CST Act. Additionally, there was a proposal to levy penalty under Section 9(2) of the CST Act.Allegations and Objections:The respondent issued show cause notices alleging suppressed transit sales turnover and wrongly claimed exemption. The petitioner filed objections stating that all sales were duly admitted in returns and tax liability was remitted. They requested an opportunity to produce records to show tax payment. The petitioner denied wrongly claiming exemption and submitted buyer declaration Forms to support their position.Violation of Natural Justice:The impugned assessment orders did not grant a proper opportunity for the petitioner to be heard. The respondent proceeded with the assessment without fixing another date for a personal hearing, despite the petitioner receiving the notice late. The Court found a violation of principles of natural justice as the petitioner was not given adequate opportunity to present their case.Court Decision and Remand:The Court allowed the Writ Petitions, set aside the impugned orders, and remanded the matter to the respondent for fresh consideration. The respondent was directed to fix a date for a personal hearing, hear the petitioner in person, peruse the records, and redo the assessment in accordance with the law. The Court emphasized the importance of following principles of natural justice in such proceedings.This detailed analysis of the judgment highlights the issues involved, the allegations made, the objections raised by the petitioner, the violation of natural justice, and the Court's decision to remand the matter for a fair assessment process.