High Court overturns tax assessment orders for 2007-08 and 2008-09, emphasizing natural justice principles

The High Court set aside the assessment orders under the Central Sales Tax Act for the years 2007-08 and 2008-09, citing violations of natural justice principles. The Court emphasized the importance of exhausting alternate remedies under taxing statutes and remanded the matters for fresh consideration, directing the Assessing Officer to provide a personal hearing and pass a reasoned order within a specified timeframe. The writ petitions were allowed, and the orders were remanded for reconsideration.

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Issues involved:
Challenging assessment orders under Central Sales Tax Act for assessment years 2007-08 and 2008-09; Admissibility of writ petitions; Jurisdiction under Article 226 of the Constitution of India; Bypassing alternate remedy under taxing statutes; Violation of principles of natural justice in assessment orders; Rejection of para-wise comments by quasi-judicial authority; Setting aside impugned assessment orders; Remanding the matter back to the authorities for fresh consideration.

Detailed Analysis:

1. Challenging Assessment Orders: The appeals were filed challenging assessment orders under the Central Sales Tax Act for the assessment years 2007-08 and 2008-09. The writ petitions were admitted, and an order of interim stay was granted in 2016. The Revenue did not file any counter affidavit or seek to vacate the interim orders. During the final hearing in November 2020, the Single Judge opined that the appellant must avail the alternate remedy as Article 226 of the Constitution is not meant to bypass statutory procedures.

2. Jurisdiction under Article 226: The High Court, while exercising jurisdiction under Article 226, is cautious in interfering with orders passed by statutory authorities when an appeal is provided for, especially in cases under taxing statutes. The court observed that each case must be decided on its own merits. The Supreme Court has emphasized that when an alternate remedy is available under a taxing statute, it should not be bypassed.

3. Violation of Principles of Natural Justice: The Court found that the impugned assessment orders were illegal as they violated the principles of natural justice. The assessing officer did not accept or reject the petitioner's request for extending time to submit objections, leading to an illegal order. The Court held that the impugned order was passed without affording the petitioner an opportunity of personal hearing, a statutory requirement.

4. Rejection of Para-wise Comments: The Court deprecated the manner in which the respondent, a quasi-judicial authority, provided para-wise comments. The Court directed the Principal Secretary/Commissioner of Commercial Taxes to ensure that para-wise comments are given by dealing with each factual contention raised by the petitioner, emphasizing the need for a thorough and thoughtful response.

5. Setting Aside Assessment Orders: The Court allowed the writ petitions, set aside the impugned assessment orders, and remanded the matters to the authorities for fresh consideration. The petitioner was directed to submit objections within a specified period, and the Assessing Officer was instructed to afford a personal hearing to the petitioner and pass a reasoned order within a specified timeframe.

6. Remand for Fresh Consideration: Following previous orders remanding the matter back to the Assessing Officer and considering the favorable assessment order dated 29.04.2019, the Court decided to follow the same procedure for the subject assessment years. The Writ Appeals were allowed, and the orders passed in the writ petitions were set aside, remanding the matters to the Assessing Officer for fresh consideration.

This comprehensive analysis covers the issues involved in the legal judgment delivered by the Madras High Court.

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