2021 (10) TMI 845 - HC - VAT and Sales Tax

Court sets aside order under TNVAT Act, emphasizes fair opportunity for response, directs fresh assessment.

Tvl. Murugan Garments Versus The Assistant Commissioner (ST) Kongunagar Circle, Tirupur.

The Court set aside the impugned order made under Section 27 of TNVAT Act as it failed to consider the cause shown by the writ petitioner and lacked ... Principles of natural justice - Assessment of escaped turnover - wrong availment of Input Tax Credit - reasonable opportunity to show cause given or not - Section 27 of TNVAT Act - HELD THAT:- Interestingly and intriguingly, the provision under which the impugned order has been made i.e., Section 27 of TNVAT Act talks about 'Best of its Judgment' for making re-assessment. This is all the more good ground to say that reasons even should be given and in the light of proviso to sub-sections(1) and (2) of Section 27 of TNVAT Act, it is imperative that the cause shown by writ petitioner is considered for re- assessment/revision by adopting Best Judgment Methodology. It follows as a sequitur that the reasons would therefore form the soul of a revision/re-assessment order and how the objections were considered should be set out and such articulations can be terse or short but it neither be laconic nor bereft of reason (as in this case) - in the instant case, there is nothing in the impugned order to show that the objections were considered. The impugned order being is set aside solely on the ground that the cause shown by writ petitioner has not been considered and it does not give any reason whatsoever for not accepting the dealer's position. To be noted, the impugned order also imposes penalty under Section 27(4) of TNVAT Act - Petition allowed. Issues:Assailing an order made under Section 27 of TNVAT Act for not considering the cause shown by the writ petitioner and imposing penalty under Section 27(4) of TNVAT Act.Analysis:The main writ petition challenged an order dated 27.08.2021 made under Section 27 of TNVAT Act. The impugned order dealt with assessment of escaped turnover and wrong availment of Input Tax Credit (ITC). The Court noted that the impugned order did not mention the provision of law under which it was made but was informed that it was under Section 27 of TNVAT Act. The Court highlighted that under Section 27, an order should not be made without giving the dealer a reasonable opportunity to show cause. In this case, multiple show cause notices were issued, and the writ petitioner responded with detailed explanations and documents. Despite this, the impugned order was passed without considering the cause shown by the writ petitioner.The Court emphasized that the impugned order should have considered the objections raised by the writ petitioner, especially since it was made under the 'Best of its Judgment' provision of Section 27 of TNVAT Act. The Court found that the impugned order lacked reasoning and failed to show that the objections were duly considered. It was highlighted that an order can be brief but should not be devoid of reasons, especially when dealing with re-assessment or revision. The Court concluded that the impugned order was set aside solely because the cause shown by the writ petitioner was not considered, and no reasons were provided for rejecting the dealer's position.In the final order, the Court directed that the impugned order be set aside, and a fresh re-assessment/revision be done by the respondent under Section 27 of TNVAT Act. The respondent was instructed to consider the cause shown by the writ petitioner in response to the show cause notices and to issue a new order within six weeks. It was made clear that no view on the merits of the matter was expressed in the order, and further opportunities for response were deemed unnecessary as the writ petitioner had already responded to the show cause notices. The writ petition was disposed of with the specified directives, and no costs were awarded.