In a significant case, the Madras High Court held that asseese cannot be punished for expecting a notice fixing date for hearing and set aside the assessment order passed under the Tamil Nadu Value Added Tax Act (TNVAT),2006 as it was passed after 15 days which was requested by the assessee to submit documents.
M/s.Chandan Paper Stores, the appellant is the proprietor of a business concern, by name, Chandan Paper Stores, in Tirunelveli. He is a registered dealer of selling paper and other stationery items. Since the annual turnover is below Rs.50 Lakhs, the appellant sought for compounding assessment under Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006.
However, the second respondent / Assessing Authority passed an assessment order determining the taxable turnover and penalty. The Court allowed the writ petitions challenged by the assesee, on the short ground that the assessment orders passed by the Assessing Authority are in violation of the principles of natural justice.
However, the Court remitted the matter back to the file of the Assessing Authority with a direction to the appellant to appear before the Assessing Authority on a particular date for personal hearing. The Assessing Authority was also directed to pass fresh orders, after assessing de nova, within a period of four weeks from the date of conclusion of personal hearing.
The Assessing Authority issued summons in terms of Rule 16(1) of the Tamil Nadu Value Added Tax Rules, 2007, requiring the appellant to appear before them on 13.07.2021 at 11 O’ Clock. The appellant received the summons on 23.06.2021 and sent a representation to the second respondent on 10.07.2021 to adjourn the hearing to a date in the next month as he has to collect records from his accountant.
The appellant has mentioned that he needs fifteen days time to collect the records from his accountant. Without considering the said request made by the appellant, the Assessing Authority, by order dated 27.07.2021, determined the taxable turnover as Rs.1,02,98,006/- and fixed the tax due as Rs.4,11,920/- with penalty of Rs.6,17,880/-.
The Single Judge disposed of the writ petition challenging the same with liberty to the appellant to file a statutory appeal before the Appellate Commissioner, as he is having an effective alternative appeal remedy, within a period of thirty days.
The appellant submitted that the second respondent, who is not inclined to give time beyond fifteen days, ought to have informed the appellant about the rejection of the request made by the appellant. Passing an order on 27.07.2021 by assuming that the appellant who wanted only fifteen days time, has no defence.
A division bench comprising Justice SS Sundar and Justice D Bharatha Chakravarthy observed that the Assessing Authority passed the assessment order without hearing the appellant. It may be true that the appellant also to be blamed for his failure to submit the documents and appear before the Assessing Authority within fifteen days.
It was evident that the appellant has requested time for collection of evidence and to submit documents. The Court noted that if the communication is received immediately on the expiry of fifteen days time asked for by the appellant, he would only expect the second respondent to fix a date for hearing, so that he would be in a position to appear before the Assessing Authority and produce the documents to substantiate his case.
“Only in the said circumstances, the assessment order impugned in the writ petition cannot be sustained merely because it was passed fifteen days after the expiry of the time asked for by the appellant. The appellant cannot be punished for expecting a notice fixing a date for hearing.’, the court viewed.
The Court found that the assessment order impugned in the writ petition is in violation of the principles of natural justice and set aside the assessment order passed by the second respondent.
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