Tv Sundaram Iyengar And Sons vs. The Assistant Commissioner(CT)

Held

The Court quashed the impugned orders on the short ground that the respondent failed to provide a personal hearing to the petitioner. The Court noted that in a previous order dated 29.10.2013, this Court had set aside earlier orders and remanded the matters with a specific direction to afford reasonable opportunity, which under Section 27 of the Tamil Nadu Value Added Tax Act, 2006, contemplates a personal hearing. The petitioner had specifically pleaded in their affidavit that a personal hearing was not granted. The respondent's counter-affidavit stated that no personal hearing was granted because the petitioner had not lodged objections, a stand the Court found unacceptable. The Court relied on the Division Bench decision in G.V. Cotton Mills (P) Ltd. Vs. Assistant Commissioner (CT), Coimbatore, which held that a personal hearing must be granted even if no reply is filed. In this case, the petitioner had filed objections. Therefore, the failure to grant a personal hearing was a fatal procedural flaw. The matters were remitted to the respondent to pass fresh orders after issuing a fresh personal hearing notice and considering all contentions raised by the assessee for all three assessment years.

Facts

M/s. TV Sundram Iyengar & Sons Limited (the petitioner) filed three writ petitions challenging orders passed by the Assistant Commissioner (CT) for the assessment years 2009-10, 2010-11, and 2012-13. These petitions followed a previous writ petition where this Court had set aside earlier orders for assessment years 2007-08 to 2011-12 and remanded the matters for affording reasonable opportunity. Subsequently, the respondent issued notices proposing reversal of input tax credit under Section 19(5)(c) and 19(4) of the Act. The petitioner submitted objections, but the respondent passed orders reversing input tax credit for 2009-10 and 2010-11, and levying tax and penalty for 2012-13. The petitioner contended that a prior intimation regarding sales returns was disregarded, that the distinction between exempt goods and exempt transactions was not appreciated, and that input tax credit reversal was wrongly applied. The petitioner also argued against the penalty levied for 2012-13.

Key Issues

1. Whether the respondent erred in disregarding a prior intimation dated 01.04.2013 regarding sales returns for the assessment year 2012-13, thereby proceeding on an incorrect footing regarding the validity of that intimation? (Mixed question of law and fact, concerning principles of administrative consistency and the effect of prior official communications). 2. Whether the respondent correctly distinguished between goods exempted from tax levy and transactions exempted from tax levy, particularly concerning supplies to canteen stores, and whether input tax credit reversal was justified when no input tax credit was claimed on such transactions? (Question of law, concerning the interpretation of tax exemption provisions and input tax credit rules). 3. Whether the penalty levied for the assessment year 2012-13 was justified, given that the transactions were culled from the petitioner's own returns and there was no suppression of information? (Question of law, concerning the conditions for levying penalty under tax statutes, particularly the requirement of mens rea). 4. Whether the respondent failed to provide a personal hearing to the petitioner, as mandated by Section 27 of the Tamil Nadu Value Added Tax Act, 2006, and as directed by this Court in a previous order? (Question of law, concerning procedural fairness and compliance with statutory and judicial directives). Petitioner's contentions: The respondent wrongly disregarded a prior intimation from the assessing authority. The respondent failed to distinguish between exempt goods and exempt transactions and wrongly reversed input tax credit. Penalty was wrongly levied as there was no suppression of facts. A host of decisions were relied upon. The respondent failed to provide a personal hearing. Respondent's contentions: The respondent contended that since the petitioner had not lodged their objections, there was no question of granting a personal hearing. (This is noted in the judgment as the respondent's stand regarding the personal hearing issue).