2022 (4) TMI 1351 - HC - VAT and Sales Tax

Court sets aside TNVAT assessment orders for 2010-11 to 2015-16 due to lack of natural justice

The Court set aside the assessment orders passed by the respondent under the TNVAT Act for the assessment years 2010-11 to 2015-16, citing failure to ... Revision of assessment order - revision sought on the ground that on verification of the web portal of the Department, it was found that there were mismatch between the turnover reported in the monthly returns filed by the Appellant company and the returns filed by the sellers at the other end - opportunity of hearing not availed - principles of natural justice - HELD THAT:- Admittedly, the appellant did not avail the opportunity said to have been provided by the respondent before passing the assessment orders, for want of service of notice dated 11.02.2021. The legal position to be noted at this juncture is that “the opportunity to provide hearing before making any decision is considered to be a basic requirement in Court proceedings”. This court, in order to provide an opportunity to the appellant and also sub-serve the interests of justice, sets aside the orders impugned herein as well as in the writ petitions. As a sequitur, the matter is remanded to the assessing officer for passing orders afresh, on merits and in accordance with law, after affording an opportunity of personal hearing to the appellant. The appellant shall file their reply to the notice dated 11.02.2021 along with necessary documentary evidence, within a period of two weeks from the date of receipt of a copy of this order. Appeal disposed off. Issues:1. Validity of the assessment orders passed by the respondent under the TNVAT Act.2. Compliance with principles of natural justice in conducting the assessment.Analysis:1. The appellant, a dealer in iron and steel, challenged the revised assessment orders passed by the respondent under the TNVAT Act for the assessment years 2010-11 to 2015-16. The appellant contended that the assessing officer must conduct an inquiry before reversing the Input Tax Credit (ITC) availed by the dealer based on discrepancies in turnover reported in monthly returns. The High Court previously directed the respondent to conduct a fresh inquiry, but the respondent issued assessment orders without providing a personal hearing to the appellant. The learned Judge dismissed the writ petitions, stating that the correctness of turnover details cannot be reviewed under Article 226 of the Constitution and must be addressed by the Appellate Authority. The appellant appealed, arguing that the orders were passed without following proper procedures and principles of natural justice.2. The respondent claimed to have issued a notice to the appellant in adherence with natural justice principles, but the appellant allegedly did not avail the opportunity for a personal hearing. The respondent justified the assessment orders, stating that the appellant failed to submit relevant documents despite the notice issued. However, the Court found that the failure to provide a hearing before making a decision goes against the fundamental principle of natural justice. Quoting the Supreme Court, the Court emphasized the importance of providing a genuine hearing opportunity to the affected party. Therefore, the Court set aside the assessment orders and remanded the matter to the assessing officer for fresh consideration, directing the appellant to submit a reply with necessary evidence within two weeks for further proceedings. Failure to comply within the stipulated time would allow the assessing officer to proceed based on available materials.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the case and the Court's decision.