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 found that while the first respondent extracted the petitioner's objections in the assessment order, each objection was not duly considered. The Court noted that the petitioner filed their returns on time, and the revised returns were accepted by the second respondent on a deemed assessment basis. The contention that revised returns were filed after four years was found to be incorrect. Crucially, the Court observed that the issue of 'mens rea' for non-payment of taxes, raised by the petitioner in their reply, was not considered in the impugned order, despite which a penalty was imposed. Furthermore, no personal hearing was afforded to the petitioner, which is mandatory as per settled law. Consequently, the impugned revised assessment order dated 09.04.2015 was quashed, and the matter was remanded back to the first respondent for fresh consideration. The first respondent was directed to pass final orders after giving the petitioner adequate opportunity, including a personal hearing, within eight weeks.

Facts

The petitioner, G.K.C.Projects Ltd., a registered dealer under the Tamil Nadu Value Added Tax Act 2006, filed revised returns for the assessment year 2009-2010, which were accepted by the respondent under Section 22(2) on a deemed assessment basis. Subsequently, the first respondent issued a notice proposing to revise the assessment for the same period, alleging short reporting of turnover amounting to Rs.38,49,663/-. This notice proposed additional tax of Rs.2,84,875/- and penalty of Rs.1,42,438/-. The petitioner submitted a reply, stating they are a Works Contractor and that mobilization advances received were not deducted in earlier returns. The petitioner contended that the impugned revised assessment order dated 09.04.2015 was passed by the first respondent without considering their objections and without affording an adequate opportunity, including a personal hearing.

Key Issues

1. Whether the impugned revised 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, as per Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 and settled law? Petitioner's arguments: The petitioner argued that their revised returns were accepted by the respondent under Section 22(2) on a deemed assessment basis. They contended that the impugned order failed to consider their detailed objections submitted in response to the pre-revision notice and that no personal hearing was afforded, which is mandatory. They also argued that the revised returns were filed promptly after discovering inadvertent errors, refuting the respondent's claim of a four-year delay. Respondents' arguments: The respondents argued that the petitioner, as a Works Contractor, should have filed Form-I returns under Section 5 and had the option of a compounding system under Section 6. They contended that once Form-I under Section 6 was filed, the petitioner could not revoke the compounding option and had to pay tax on the total receipt, including advances. They also argued that the petitioner's only remedy was a statutory appeal, not a writ petition.