2019 (5) TMI 648 - HC - VAT and Sales Tax

High Court quashes assessment orders, emphasizes independent assessment by Assessing Officer

The High Court quashed the assessment orders for the years 2010-11 to 2015-16, emphasizing the need for independent assessment by the Assessing Officer ... Non-application of mind - Blind reliance on Enforcement Wing report - Obligation of Assessing Officer to independently verify departmental reports - Enforcement Wing not an independent source of information - Quashing of assessment orders - Right to personal hearingNon-application of mind - Blind reliance on Enforcement Wing report - Obligation of Assessing Officer to independently verify departmental reports - Enforcement Wing not an independent source of information - Impugned assessment orders were vitiated by total non-application of mind where the Assessing Officer blindly accepted Enforcement Wing field audit reports without independent verification. - HELD THAT: - The court found that the Assessing Officer, while confirming the proposals, merely recorded that the dealer's replies could not be accepted because defects were pointed out on scrutiny during field audit and there was no independent consideration of the detailed replies, supporting facts and judicial authorities placed before the authority. The Enforcement Wing officials form part of the Department and are not an independent source; being a quasi-judicial function, the Assessing Officer is required to take an independent decision and cannot mechanically adopt the turnover or findings contained in Enforcement Wing proposals. Reliance solely on the Enforcement Wing report, without application of mind to the dealer's objections, renders the assessment orders unsustainable.Impugned assessment orders for the stated assessment years are quashed for non-application of mind arising from blind acceptance of Enforcement Wing reports.Quashing of assessment orders - Right to personal hearing - Matters were remanded for fresh consideration with directions to afford the assessee adequate opportunity including personal hearing and to pass fresh final orders within a stipulated time. - HELD THAT: - Having quashed the assessments for lack of independent adjudication, the court remitted the matters to the respondent for de novo consideration. The respondent is required to give the petitioner adequate opportunity to raise all objections available under law, including granting the right of personal hearing, and thereafter to pass final orders after applying independent mind. A time limit of eight weeks from receipt of the order was fixed for disposal of the remanded proceedings.Proceedings remitted to the respondent for fresh consideration with directions to grant opportunity of personal hearing and decide afresh within eight weeks.Final Conclusion: The assessments for AYs 2010-11 to 2015-16 are quashed for want of independent application of mind; the matters are remitted to the respondent to decide afresh after affording the petitioner full opportunity including personal hearing, within eight weeks; writ petitions allowed. Issues:Challenging assessment orders for the assessment years 2010-11 to 2015-16 based on revisions proposed by Enforcement Wing officials.Analysis:The petitioner contended that they regularly filed monthly returns and paid taxes, which were accepted on a deemed assessment basis under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006. However, the respondent later proposed to revise the assessment based on reports from Enforcement Wing officials, sending pre-revision notices to the petitioner for the relevant assessment years. The petitioner denied any suppression of sales or purchases in their detailed replies to these notices.The petitioner argued that the respondent's revision of assessment was solely based on the Enforcement Wing officials' report, which was confirmed without proper consideration. They claimed that the respondent's assessment orders lacked independent evaluation and were blindly accepted without addressing the objections raised by the petitioner.The High Court observed that the Assessing Officer cannot merely rely on reports from Enforcement Wing officials but must independently assess the accuracy of such reports. In this case, the petitioner had provided detailed responses denying any wrongdoing, supported by facts, figures, and legal precedents. The Court noted that the respondent failed to consider these submissions and instead accepted the Enforcement Wing officers' audit report without independent verification.Citing legal precedents, including the case of Madras Granites (P) Limited vs. Commercial Tax Officer, the Court emphasized the importance of Assessing Officers making independent decisions and not being influenced by reports from internal departments. The Court concluded that the respondent's assessment orders lacked proper consideration and were passed without due application of mind.Consequently, the High Court quashed the impugned assessment orders and remanded the matters back to the respondent for fresh consideration. The Court directed the respondent to provide the petitioner with an opportunity to raise objections, including the right to a personal hearing, and instructed the respondent to issue final orders within eight weeks from the date of the Court's order. The writ petitions were allowed, with no costs awarded, and connected miscellaneous petitions were closed.