Tvl.G.K.C.Projects LTD. vs. The Assistant Commissioner

Held

The Court held that the principles of natural justice were violated by the respondents in passing the impugned assessment order. It was noted that while the petitioner's objections were extracted in the order, they were not duly considered. Specifically, the issue of mens rea, raised by the petitioner in their reply concerning the non-payment of taxes and the consequent non-applicability of penalty, was not addressed in the impugned order. Furthermore, the Court found that no personal hearing was afforded to the petitioner, which is mandatory as per settled law. The Court also corrected the respondents' contention regarding the delay in filing revised returns, noting that the revised returns were filed promptly and accepted. Consequently, the impugned revised assessment order dated 09.04.2015 was quashed. The matter was remanded back to the first respondent for fresh consideration, with directions to provide the petitioner with an adequate opportunity, including a personal hearing, to raise all objections available under law. The first respondent was directed to pass final orders within eight weeks.

Facts

The petitioner, G.K.C. Projects Ltd., a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, filed their returns for the assessment year 2010-2011. They initially filed returns with inadvertent errors and subsequently filed revised returns, which were accepted by the second respondent on a deemed assessment basis. After approximately three years and eight months, the first respondent issued a notice proposing to revise the assessment, alleging short reporting of turnover amounting to Rs. 2,60,33,446/-. This proposed a demand of additional tax of Rs. 19,26,475/- and a penalty of Rs. 19,26,475/-. The petitioner submitted a reply detailing their status as a Works Contractor and explaining the turnover calculation, including mobilization advances. However, the petitioner contended that their objections were not duly considered, and no personal hearing was granted before the impugned assessment order dated 09.04.2015 was passed by the first respondent.

Key Issues

1. Whether the impugned revision assessment order dated 09.04.2015, passed by the first respondent, is liable to be quashed for non-consideration of the petitioner's objections and violation of principles of natural justice, specifically the lack of a personal hearing? (Section 22(2) and general principles of natural justice) 2. Whether the penalty imposed under the impugned assessment order is sustainable without considering the petitioner's contention regarding the absence of mens rea? (General principles of penalty imposition) Petitioner's arguments: The petitioner argued that their objections, particularly regarding the calculation of turnover as a Works Contractor and the non-deduction of mobilization advances, were not adequately considered in the impugned order. They further contended that the assessment order was passed without affording them a mandatory personal hearing, thus violating the principles of natural justice. The petitioner also asserted that the penalty was wrongly imposed as there was no mens rea for any alleged non-payment of taxes. Respondents' arguments: The respondents argued that the petitioner, as a Works Contractor, had opted for the compounding system under Section 6 of the Act and paid tax on total receipts, including advances. They contended that once the compounding system was chosen, it could not be revoked, and advances could not be reduced from the total turnover. The respondents also argued that the petitioner's only remedy was a statutory appeal, and the writ petition was not maintainable.