The Madras High Court remanded the VAT order passed without furnishing materials confirmed the demand for reconsideration.
Justice C. Saravanan observed that “Although, the petitioner has been evading tax as it evident from the fact that no proper returns were filed by him for the respective Assessment Years in respect of the Bar run by him, the fact remains that the impugned orders have been passed without furnishing the materials, based on which, the demand has been confirmed by the impugned orders”.
The assessee-petitioner, Hotel Sun World, operates both a hotel and a bar with separate VAT and GST registrations. Regarding the VAT registration for bar sales, an inspection took place between December 8, 2022, and December 10, 2022. This inspection resulted in show cause notices being issued to the assessee for the assessment years 2017-2018 to 2022-2023, followed by personal hearing notices dated January 4, 2024, and February 16, 2024. The assessee has challenged the same.
The assessee contended that in response to the initial notice for a personal hearing dated 04.01.2024, the petitioner requested the first respondent to provide the report from the Manager, TASMAC, regarding liquor purchases on 12.01.2024. However, this report was not furnished.
Subsequently, the assessee again requested the documents in response to a personal hearing scheduled for 23.02.2024, as per the notice dated 16.02.2024. Despite these requests, the impugned orders were passed without providing the requested documents.
It was also submitted that a sum of Rs. 2,62,284/- was collected from the assessee during the inspection conducted between 08.12.2022 and 10.12.2022. The assessee argued that the impugned VAT orders violate the principles of natural justice and should be set aside. The assessee sought a directive for the first respondent to furnish the records on which the impugned orders were based.
The Government Advocate for the first respondent contended that the assessee failed to cooperate with the Inspection Team during the inspection. Consequently, notices were issued, followed by two personal hearing notices dated 04.01.2024 and 16.02.2024, setting the hearing dates for 12.01.2024 and 23.02.2024, respectively. The assessee’s lack of cooperation with the Department led to the passing of the impugned orders, which confirmed the demand as per the issued notices.
After hearing the Senior Counsel for the assessee, the Government Advocate for the first respondent, and the Standing Counsel for the second respondent, the Court observed that while the petitioner has been evading tax, as evidenced by the failure to file proper returns for the respective assessment years for the bar he operates, the impugned orders were issued without furnishing the materials on which the demand was confirmed.
Therefore, the Court was inclined to partly favour the petitioner by setting aside the impugned orders and remitting the Value Added Tax ( VAT ) case back to the first respondent to pass fresh orders on merits and in accordance with the law, subject to the assessee depositing Rs. 30,00,000/- to the credit of the Department within 30 days from the receipt of a copy of this order.
In the absence of proper records, the first respondent is entitled to confirm the demand using the best judgment method, the bench add2d.
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