Tvl. Rahul Agencies vs. The State Tax Officer

Held

The Court held that the impugned assessment orders dated 29.07.2021 were vitiated by a violation of the principles of natural justice. The Court found that the respondent's contention that showing the documents to the petitioner was sufficient compliance was not in line with the established legal position. Relying on the Division Bench judgment in Kwality Granites and Marbles, the Court reiterated that mere perusal of documents is not sufficient; copies must be furnished to the assessee, especially when those documents are to be used for passing adverse orders. The Court clarified that Section 85(1) of the TNVAT Act, concerning confidentiality, cannot be interpreted to prevent the furnishing of documents to the assessee against whom they are to be used. Therefore, the assessment orders were quashed. The Court directed the respondent to furnish the requested documents to the petitioner within two weeks, grant the petitioner two weeks to respond, and then provide a personal hearing within two weeks thereafter, with final orders to be passed within four weeks of the hearing.

Facts

The petitioner, Tvl. Rahul Agencies, challenged assessment orders for the years 2011-12 to 2014-15, issued by the State Tax Officer, Sivakasi II. These orders were passed after an earlier set of assessment orders from 2018 were quashed by this Court in W.P.(MD)Nos.7933 to 7936 of 2018, due to a violation of natural justice as personal hearing was not provided. Following the remand, the respondent issued notices for personal hearing. The petitioner responded by requesting copies of documents that the respondent intended to use against them. The respondent, however, issued summons for personal hearing and subsequently passed the impugned assessment orders on 29.07.2021 without furnishing the requested documents, merely stating that the inspection officers had shown the documents to the dealer.

Key Issues

1. Whether the impugned assessment orders dated 29.07.2021 are liable to be quashed for violating the principles of natural justice, specifically concerning the non-furnishing of documents relied upon by the revenue, despite repeated requests by the petitioner? (Question of law and mixed fact and law, turning on principles of natural justice and potentially Section 85(1) of the TNVAT Act, 2006). Petitioner's arguments: The petitioner contended that the principles of natural justice were violated because crucial documents, which were to be used against them, were not furnished despite specific requests. They argued that merely allowing perusal of documents, as stated in the impugned orders, is insufficient compliance. They relied on the Division Bench judgment in Kwality Granites and Marbles Vs. The Registrar, Tamil Nadu Taxation Special Tribunal, which held that furnishing copies of relied-upon documents is essential for an effective reply and compliance with natural justice. Revenue's arguments: The Revenue argued that Section 85(1) of the TNVAT Act, 2006, mandates confidentiality of documents and that showing the documents to the dealer was sufficient compliance. The judgment does not explicitly record further arguments from the Revenue.