The Madras High Court has recently held that the assessment under the Tamilnadu General Sales Tax Act cannot be re-opened merely on the basis of the opinion of the audit party alone, without any independent investigation by the assessing officer.
The sole grievance of the petitioner in the instant case was that the opinion of the Audit Party cannot constitute information, on the basis of which the Assessing Officer could reopen the assessment.
On behalf of the department, it was contended that the belated payment of tax was brought to their knowledge by way of Audit Party objections and thereafter, the respondent has issued the demand notice under Section 9(2)B of the CST Act, 1956, read with Section 24(3) of the repealed TNGST Act, 1959, for the belated payment of Rs.2,50,000/-.
Justice Nisha Banu accepted the contentions of the petitioner that the Assessing Officer could not reopen the assessment based on the opinion of the Audit Party alone. The court further noted that the Punjab and Haryana High Court has already decided a similar issue in favour of the assessee in the case of Haryana Co-operative Sugar Mills Ltd., v. State of Haryana.
The Court said that “The Assessing Officer has to independently record his view for such reopening if he proposes to reopen and thereafter, notice has to be issued to the parties regarding such reopening and after considering their objections/representations in this regard, order has to be passed. In the counter affidavit, it is averred by the respondent that the contentions of the petitioner have already been considered in the original assessment order dated 28.09.2007 itself. It is necessary to reiterate that the petitioner has made his objections by way of representation on 14.09.2009, ie., after receipt of the notice dated 02.09.2009. Therefore, it is crystal clear that the representation of the petitioner dated 14.09.2009 was not at all considered by the respondent, before passing the impugned demand notice dated 12.01.2010.”
“On this sole ground alone, the impugned demand notice cannot be sustained, since it is a clear violation of principles of natural justice,” the Court said.
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