VAT mismatch assessments must follow notice, objection, hearing and cross-examination safeguards before completion of further action.

In mismatch-based assessments under the Tamil Nadu Value Added Tax Act, 2006, the assessing authority must follow the departmental circular procedure by verifying departmental data, issuing notice with enclosures, allowing objections and personal hearing, and, where appropriate, permitting cross-examination before further action is completed. The Madras HC directed compliance with that procedure in the present matter and accepted the assessee's volunteered remittance of 15% of the disputed tax, making the continued relief conditional on payment within the stipulated period. The assessment was not finally quashed outright, but fresh proceedings were ordered in accordance with the mismatch-circular safeguards.

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Issues: Whether the assessment arising from a mismatch dispute under the Tamil Nadu Value Added Tax Act, 2006 should be interfered with and whether the assessee was entitled to the procedural safeguards contemplated in the departmental circular before completion of further action.

Analysis: The dispute concerned an assessment made under the Tamil Nadu Value Added Tax Act, 2006 in a mismatch case. The Court noted the earlier departmental circular issued to deal with mismatch matters, under which the assessing authority must verify the departmental data, issue notice with enclosures, afford opportunity of objection and personal hearing, and, where appropriate, permit cross-examination. The Court directed that the same procedure be followed in the present matter. It also accepted the petitioner's volunteered remittance of 15% of the disputed tax, while making the ultimate relief conditional on payment within the stipulated time.

Conclusion: The assessment was not finally quashed at once. The petitioner obtained procedural relief and a conditional setting aside of the assessment upon payment of 15% of the disputed tax within four weeks.

Final Conclusion: The writ petition was disposed of by directing fresh proceedings in accordance with the mismatch-circular procedure and by granting the petitioner an opportunity to avoid confirmation of the assessment by making the volunteered payment within time.

Ratio Decidendi: In mismatch-based VAT assessments, the assessing authority must follow the prescribed verification, notice, hearing, and, where appropriate, cross-examination procedure before concluding the assessment.

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