2024 (1) TMI 34 - HC - VAT and Sales Tax

Tax authority must provide reasoned decisions on rectification applications under Section 84 TNVAT Act

M/s Ess Emm Textiles Versus The Assistant Commissioner (ST)

The HC set aside the tax authority's rejection of the petitioner's rectification application under Section 84 of TNVAT Act. The court held that the ... Validity of intimation dated 30.04.2021 issued for the assessment years 2011-12, 2012-13 and 2013-14 - rejection of the petitioner’s application under Section 84 of TNVAT Act primarily on the ground that it is not a speaking order - violation of principles of natural justice - HELD THAT:- The impugned order does suffer from the vice of being a non-speaking order inasmuch as it only contains the conclusion viz., that the request for rectification being rejected without assigning any reasons. When a request is made for rectification of an order, it is not for the authority concerned to refuse to exercise this power without giving any reason or without adverting to the representation made by the aggrieved person. When the circumstances exist for the exercise of this power, it is mandatory to have recourse to it in public interest and to avoid injustice in taxation. Keeping in view, the nature of the power to rectify errors apparent on the face of the record, it appears to me that it is incumbent on the Assessing Authority while dealing with the rectification petition to pass order assigning reason, in other words, pass speaking order. It is now well recognised as one of the norms of natural justice that reasons be recorded and conveyed in an order quasi-judicial in nature - What the assessing authority is expected by the rules of fundamental fairplay is not a mere empty formality but what the assessing authority is duty bound to do is to give reasoned finding so that an aggrieved party may be able to canvass the correctness of the same. The impugned orders are non-speaking and thus liable to be set-aside. The respondent is directed to pass a speaking order within a period of 8 weeks from the date of receipt of a copy of this order after providing the petitioner a reasonable opportunity of hearing - Petition allowed. Issues:The judgment involves challenging an intimation issued for assessment years 2011-12, 2012-13, and 2013-14 under the Tamil Nadu Value Added Tax Act. The rejection of the petitioner's application under Section 84 of the TNVAT Act is contested primarily on the ground that the assessment orders do not comply with previous court directions, lack proper documentation, and contain errors apparent on the face of the record.Challenges to Assessment Orders:The petitioner argued that the assessment orders did not comply with court directions regarding adhoc estimation of sales, lacked specific justifications for rejecting 50% of the turnover, and improperly confirmed proposals without proper reasoning. Additionally, the rejection based on the lack of documentary evidence was disputed, as the petitioner had previously submitted all required documents. The rejection of the claim regarding goods sent to a specific entity was also challenged on the basis of furnished documents and lack of legal support for the assessing authority's demands.Rectification Petition Rejection:The petitioner contended that the rejection of the rectification petition under Section 84 of the TNVAT Act was unjustified as it was a non-speaking order. The petitioner had detailed the errors in the assessment order that warranted rectification, but the respondent failed to address any of these grounds while rejecting the petition. In contrast, the respondent argued that the assessment orders were justified as the petitioner failed to provide various requested documents.Judicial Analysis and Decision:Upon reviewing the arguments and materials, the court found that the rejection of the rectification petition was indeed a non-speaking order, lacking proper reasoning. Citing legal precedents emphasizing the importance of providing reasons in quasi-judicial decisions, the court held that a speaking order was necessary in this case. The court highlighted that transparency and accountability in decision-making are crucial, and ordered the respondent to pass a speaking order within 8 weeks, providing the petitioner with a reasonable opportunity to be heard. Consequently, the writ petitions were disposed of without costs.