2019 (5) TMI 496 - HC - VAT and Sales Tax

Court sets aside rectification order for lack of personal hearing. Emphasizes procedural fairness in tax law.

The Court set aside the impugned order of rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, due to the lack of a personal ... Validity of rectification order - revision of assessment - Jurisdiction - Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - case of petitioner is that the order traverses beyond the jurisdiction imposed under Section 84 of the Act - opportunity of personal hearing was not granted prior to disposal of the application - principles of natural justice - HELD THAT:- The proviso to Section 84 of the Act specifically refers to notice to be issued to the Assessee, which has been done in this case on 27.06.2018. However, the proviso also mentions 'reasonable opportunity' of being heard which in my view includes a personal hearing. This admittedly has not been granted to the petitioner - The consistent view taken by courts is to the effect that personal hearing is an important component of reasonable opportunity. There is a statutory requirement for such opportunity to be granted, prior to rectification, whether such opportunity has been sought for or not. The petitioner is directed to appear before the authority on 13.03.2019 at 10.30 am, and after affording an opportunity of personal hearing, the respondent shall pass orders, de novo, within a period of four weeks thereafter - petition allowed by way of remand. Issues:Challenge to order of rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 on the ground of jurisdiction and revision of assessment. Lack of personal hearing opportunity before disposal of application under Section 84 of the Act.Analysis:1. The petitioner challenged an order of rectification under Section 84 of the Act, contending that it exceeded the jurisdiction granted under the Act by revising the assessment itself. The impugned order sought to revise the assessment for the period 2015-16, concerning inter-state sales of air conditioning units to Southern Railways without C-forms. The petitioner discharged Central Sales Tax at 5% based on Commodity Code 2112, but inadvertently mentioned a different code in monthly returns.2. The assessment was completed by the second respondent based on C-forms submitted by the petitioner, granting concessional tax rate for valid C-Forms. However, a notice was issued proposing revision under Section 84 of the Act and CST Act, levying tax at 14.5% on a specific turnover. The petitioner objected, seeking a 5% concession, but the objection was overruled in the impugned order, taxing the sales at 15.5%.3. The petitioner's main argument was the lack of a personal hearing opportunity before the disposal of the application under Section 84 of the Act. Section 84 mandates that no rectification enhancing assessment shall occur without granting the dealer a reasonable opportunity to be heard. The Court cited precedents emphasizing the importance of personal hearings in ensuring fairness and natural justice.4. The Court found that while a notice was issued to the petitioner, a personal hearing was not granted, which is essential for a reasonable opportunity as per Section 84. Relying on previous judgments, the Court emphasized that personal hearing is a crucial component of providing a fair opportunity to the dealer. Hence, the impugned order was set aside, directing the respondent to provide a personal hearing and pass orders within four weeks.5. Consequently, the writ petition was disposed of with no costs, and the petitioner was instructed to appear before the authority for a personal hearing. The judgment highlighted the statutory requirement of granting a personal hearing before rectification under Section 84 of the Act, ensuring procedural fairness and adherence to natural justice principles.