2018 (7) TMI 1664 - HC - VAT and Sales Tax

High Court sets aside assessment order under Tamilnadu VAT Act for lack of personal hearing

The High Court found that the respondent's failure to provide a personal hearing to the petitioner before passing the assessment order under the Tamilnadu ... Principles of Natural Justice - no personal hearing granted - validity of assessment order - Best Judgement Assessment - disallowance of ITC - Held that:- It is seen that the assessment order is deemed to have been assessed as per Section 22(2) of Tamilnadu VAT Act,2006. On random scrutiny, the petitioner was issued with the summons and since he failed to respond, final orders were passed - It is well settled by the instructions issued by the department as well as various judgments that even where objections are filed or not, an opportunity of personal hearing shall be afforded to the dealer concerned - In the instant case, the summons were issued on 20.01.2010. There is no reference as to the date of service of summons and there was no reference as to the date fixed for personal hearing. The respondent has not communicated the hearing date fixed for personal hearing and called the petitioner to make his submissions. In the instant case, the mandatory requirement of affording an opportunity of personal hearing was not given to the petitioner and the respondent proceeded to pass orders only because the petitioner failed to respond and he has not applied his mind as to the documents available before the authority also - Such an act would amount to violation of principles of natural justice. The matter is remanded back to the respondent - petition allowed by way of remand. Issues Involved:Challenging assessment order under Tamilnadu VAT Act for non-appearance of dealer despite summons; Violation of principles of natural justice due to lack of personal hearing; Availability of alternative remedy of appeal; Interpretation of reasonable opportunity to show cause including personal hearing.Analysis:The petitioner filed a writ petition challenging an assessment order passed by the respondent under the Tamilnadu VAT Act for the year 2006-2007, citing non-appearance due to ill-health. The petitioner argued that the order was passed without providing an opportunity for personal hearing, violating principles of natural justice. The respondent contended that summons were issued, but the petitioner failed to appear, and an appeal was available as an alternative remedy. The High Court noted that the assessment was made under Section 22(2) of the Act after the petitioner failed to respond to summons. However, it was observed that the respondent did not communicate the date for personal hearing, as required by established instructions and case law.The Division Bench of the Court referred to relevant provisions and circulars emphasizing the importance of affording a fair opportunity, including personal hearing, to the dealer before passing assessment orders. The Court discussed various judicial precedents highlighting the significance of oral hearings in cases involving complex factual disputes. It was noted that fairness may require oral hearings in certain situations, as oral arguments can influence decision-making significantly. The Court cited decisions where personal hearings were deemed necessary for fair play and justice, especially in cases involving factual complexities.In light of the above analysis, the Court found that the respondent's failure to provide a personal hearing to the petitioner amounted to a violation of natural justice. The impugned assessment order was set aside, and the matter was remanded back to the respondent. The petitioner was directed to file objections within 15 days, and the respondent was instructed to pass final orders after providing a personal hearing within four months. The writ petition was allowed with no costs, and the connected miscellaneous petition was closed.