2019 (9) TMI 671 - HC - VAT and Sales Tax

Court annuls VAT assessment order due to procedural errors, upholds fairness and natural justice

The High Court quashed the assessment order under the Tamilnadu Value Added Tax Act, 2006 for the period 2013-14, criticizing the assessing officer for ... Validity of assessment order - TNVAT Act - alleged unaccounted purchases of Cardamom - seeking opportunity to cross-examine the consignors mentioned in the notice - also seeking copies of transport bills, copy of payment and despatch details in regard to the twelve transactions - principles of Natural Justice - HELD THAT:- It is appalling that the impugned order of assessment proceeds to fasten tax liability of ₹ 14,53,811/- along with penalty of ₹ 21,80,717/- in such a careless and cursory fashion. None of the principles at play for framing of an assessment, such as consideration of the objections filed, grant of opportunity for personal hearing or application of mind by the assessing officer find place in the impugned order. The impugned assessment does not take into account any of the detailed submissions made by the petitioner in regard to the sixteen (16) transactions. There has been gross violation of the principles of natural justice insofar as the specific request for the personal hearing has also been ignored. In all, the order indicates gross misapplication and non-application of mind. Impugned assessment is quashed - petition allowed. Issues:Assessment under Tamilnadu Value Added Tax Act, 2006 for the period 2013-14.Analysis:The petitioner, a dealer in cardamom, faced an assessment under the Tamilnadu Value Added Tax Act, 2006 for the period 2013-14. The assessment was based on a pre-assessment notice issued after an inspection and audit by the Enforcement wing, alleging unaccounted purchases of cardamom. The notice detailed the alleged unaccounted purchases, totaling &8377; 3,72,39,836, and proposed additions to the assessee's accounts. The petitioner responded, disputing the alleged purchases and providing explanations for the transactions in question. The petitioner also requested to cross-examine consignors and sought additional documentation for verification. However, the assessing officer passed the impugned order dated 21.09.2016, disregarding the petitioner's submissions and objections. The order imposed a tax liability of &8377; 14,53,811 along with a penalty of &8377; 21,80,717, without considering the principles of natural justice, personal hearing, or application of mind. The High Court found the assessment order to be careless, cursory, and a gross violation of procedural fairness, leading to a quashing of the assessment.The High Court criticized the assessing officer for the hasty and unjust assessment, highlighting the lack of consideration for the petitioner's objections and detailed submissions. The court noted the absence of principles of natural justice in the assessment process, emphasizing the failure to grant a personal hearing despite the petitioner's request. The court deemed the assessment order to be a misapplication and non-application of mind, reflecting a disregard for fair procedure and legal requirements. Consequently, the court quashed the impugned assessment order, emphasizing the importance of adherence to procedural fairness and due process in tax assessments under the relevant legislation.In conclusion, the High Court allowed the writ petition, setting aside the impugned assessment order and closing the connected miscellaneous petition. While the court contemplated imposing a cost on the authority for the flawed assessment process, it refrained from doing so considering the circumstances presented at the time of the order. The judgment underscores the significance of upholding procedural fairness, adherence to legal principles, and due consideration of submissions and objections in tax assessments to ensure a just and lawful process under the Tamilnadu Value Added Tax Act, 2006.