2020 (12) TMI 1123 - HC - VAT and Sales Tax

Court quashes tax assessment orders, emphasizes fair process & burden of proof for dealers

M/s. Pharma Fabrikon, Versus The Assistant Commissioner (CT) (FAC), Madurai

The court quashed the assessment orders under Section 27 of the Tamil Nadu Value Added Tax Act, 2006, for the years 2006-07 to 2014-15. It found the ... Principles of natural justice - Validity of revision of assessment orders - allegation of petitioner is that without verifying the petitioner's books of accounts, completed assessments were revised - assessment years from 2006-07 to 2014-15 - HELD THAT:- In all the replies sent by the petitioner to the proposal made by the respondent to revise the completed assessment under Section 27 of TNVAT Act, 2006, they have undertaken to cooperate with the respondent by furnishing all the records/books of accounts, called for by the respondent. In all the replies sent by the petitioner to the respondent, they have also referred to the decision of this Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT]. However, as seen from the impugned assessment orders, the respondent has not adhered to the settled procedure laid down by this Court, while passing the impugned assessment orders under Section 27 of the TNVAT Act, 2006. The counter affidavit filed by the respondent has not answered the grounds raised by the petitioner that the impugned assessment orders have been passed in a mechanical fashion without verification of the petitioner's books of accounts, but, just relying upon the web report maintained by the respondent. While that be so, it is clear that the procedure contemplated as per the decision in JKM GRAPHICS SOLUTIONS PRIVATE LIMITED has not been adhered to by the respondent, while passing the impugned assessment orders. Therefore, the impugned assessment orders have been passed arbitrarily and in gross violation of principles of natural justice and contrary to the settled procedure of law. The matter is remanded back to the respondent for fresh consideration - Petition allowed by way of remand. Issues involved: Challenge to revision of assessment orders under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 based on Enforcement Wing Officers' report, failure to verify petitioner's books of accounts, adherence to due procedure, maintainability of Writ Petitions, burden of proof on dealer, violation of principles of natural justice.Analysis:1. Revision of Assessment Orders: The petitioner challenged the revision of assessment orders passed under Section 27 of the Tamil Nadu Value Added Tax Act, 2006, for the assessment years from 2006-07 to 2014-15. The challenge was primarily based on the contention that the revision was solely done on the basis of the Enforcement Wing Officers' report and proposals without verifying the petitioner's books of accounts. The petitioner argued that an independent assessment should have been conducted after verifying their books of accounts, which was not done by the respondent before revising the assessment orders.2. Legal Procedure and Precedent: The petitioner relied on a judgment of the court in a similar case to argue that the respondent did not follow the due procedure established under law. The court noted that the respondent had not evolved a mechanism to address cases of mismatch despite previous directions given by the court. The judgment emphasized the necessity of an independent assessment and inter-departmental enquiry before revising completed assessments against dealers. The court found that the respondent had mechanically accepted the findings of the Enforcement Wing Officials without conducting an independent assessment or verifying the petitioner's books of accounts.3. Principles of Natural Justice: The court observed that the respondent had not adhered to the settled procedure laid down by previous judgments while passing the impugned assessment orders. It was concluded that the impugned assessment orders were passed arbitrarily, in violation of principles of natural justice, and contrary to the established procedure of law. Consequently, the court quashed the assessment orders and remanded the matter back to the respondent for fresh consideration within a specified timeframe, emphasizing the right of the petitioner to raise objections and have a personal hearing.4. Maintainability of Writ Petitions and Burden of Proof: The respondent contended that the petitioner had alternative statutory appellate remedies available under the TNVAT Act, 2006, making the Writ Petitions not maintainable. However, the court found that the impugned assessment orders were passed without following the necessary procedures and principles of natural justice, rendering them arbitrary and in violation of the law. The court emphasized the burden of proof lying on the dealer under the TNVAT Act, 2006, and the necessity for the respondent to conduct an independent assessment before revising completed assessments.In conclusion, the court's judgment focused on the importance of following due procedures, conducting independent assessments, and upholding principles of natural justice in revising assessment orders under the TNVAT Act, 2006. The court's decision to quash the impugned assessment orders and remand the matter for fresh consideration highlighted the significance of adhering to established legal precedents and ensuring fair treatment of dealers in tax assessment proceedings.