2021 (9) TMI 1144 - HC - VAT and Sales Tax

High Court overturns assessment orders, remits for fresh review with personal hearing and document submission.

M/s. All India Metal and Alloys Versus The Assistant Commissioner Harbour-IV Assessment Circle Chennai.

The High Court allowed the Writ Appeals, set aside the Writ Court's order, and quashed the impugned assessment orders. The matters were remitted to the ... Violation of principles of natural justice - Validity of assessment order - documents and details sought for by the Appellant have not been furnished - availability of alternative remedy or not - HELD THAT:- The Respondent has virtually ignored the reply dated 18.11.2013, wherein the Appellant, apart from giving its preliminary objections for the revision of assessment, has also sought for certain details and documents. That apart, there has been a specific request made by the Appellant in the representation 18.11.2013 to grant an opportunity of personal hearing. This has also been brushed aside, while issuing the second notice dated 03.12.2013. That apart, in the Assessment orders the Assessing Officer has stated that the Appellant has not furnished any reply to the second notice, whereas it has been admitted in the Counter-affidavit that the reply / objections dated 06.12.2013 has been received. There have been gross violation of principles of natural justice, which would justify that the Appellant is entitled to invoke the extraordinary jurisdiction of this Court - matters are remitted to the Assessing Officer and the Assessing Officer is directed to issue notice to the Appellant to appear in-person and during their personal appearance, the Appellant is directed to submit a further reply, clearly specifying as to what are all documents and details they would require - Petition not maintainable and is dismissed - appeal allowed by way of remand. Issues Involved:1. Violation of principles of natural justice.2. Availability of alternative remedy under the TNVAT Act.3. Validity of assessment orders based on retrospective cancellation of registration of selling dealers.4. Requirement of providing requested documents/details by the Assessing Officer.Detailed Analysis:1. Violation of Principles of Natural Justice:The Appellants challenged the assessment orders on the grounds of violation of principles of natural justice, asserting that the documents and details they requested were not furnished by the Respondent. The High Court acknowledged that the Appellant's objections dated 18.11.2013 and 06.12.2013 were not duly considered by the Assessing Officer. The Court emphasized that the Respondent's failure to provide the requested documents and details, as well as the denial of a personal hearing, constituted a gross violation of principles of natural justice. The Court noted that the Assessing Officer admitted in the counter-affidavit that the reply dated 06.12.2013 was received, which was not reflected in the assessment orders. This justified the Appellant's invocation of the extraordinary jurisdiction of the Court under Article 226 of the Constitution of India.2. Availability of Alternative Remedy under the TNVAT Act:The Writ Court initially dismissed the petitions on the grounds of availability of an alternative remedy under the TNVAT Act, referencing decisions of the Hon'ble Supreme Court. However, the High Court, citing the Supreme Court's decision in Radha Krishnan Industries -vs- State of Himachal Pradesh, clarified that the rule of alternative remedy is a rule of discretion and not compulsion. The Court highlighted that exceptions to this rule include cases where there is a violation of principles of natural justice. Given the established violation in this case, the Court held that the Writ Petitions were maintainable despite the availability of an alternative remedy.3. Validity of Assessment Orders Based on Retrospective Cancellation of Registration of Selling Dealers:The Assessing Officer's notices alleged that the Appellant wrongly availed Input Tax Credit (ITC) on purchases from dealers whose registration certificates were retrospectively cancelled. The Appellant contended that at the time of purchase, the selling dealers' registrations were valid, and they had paid the taxes. The Court observed that the Assessing Officer failed to provide the requested details about the registration status and transactions of the selling dealers, which were crucial for the Appellant to substantiate their claims. The Court found that the retrospective cancellation of registration and the lack of transparency in providing the necessary details undermined the validity of the assessment orders.4. Requirement of Providing Requested Documents/Details by the Assessing Officer:The Appellant requested 23 specific details/documents in their objections dated 18.11.2013 to verify the legitimacy of their transactions. The Assessing Officer did not address these requests and proceeded with issuing a second notice on 03.12.2013, adding new grounds for revision without considering the Appellant's initial objections. The Court held that the Respondent's failure to furnish the requested documents/details or to respond to the Appellant's communication constituted a breach of natural justice. The Court directed the Assessing Officer to provide the requested documents or allow the Appellant to peruse them, and to afford an opportunity for a personal hearing before redoing the assessment.Conclusion:The High Court allowed the Writ Appeals, set aside the Writ Court's order, and quashed the impugned assessment orders. The matters were remitted to the Assessing Officer with directions to issue a notice for personal appearance, provide the requested documents/details, and allow the Appellant to submit fresh objections. The Assessing Officer was instructed to afford a personal hearing and redo the assessment in accordance with law. The Writ Appeals were allowed without costs.