M/S.Vtm Limited vs. The Assistant Commissioner

Held

The Court held that the respondent had violated the principles of natural justice by not affording sufficient opportunity to the petitioner to place all objections available under law. Furthermore, in light of the Division Bench judgment of this Court in W.A.Nos.1412 and 1413 of 2009, the assessment order, which was characterized as a provisional assessment order passed after the end of the assessment year, had to be quashed. The Court noted that the impugned order, passed on a refund application under Section 18 of the TNVAT Act, also dealt with reversal of ITC and rejection of refund claims, and that additional documents submitted by the petitioner were not considered. The ratio decidendi is that an assessment order, particularly one characterized as provisional, passed after the statutory period, and which fails to provide adequate opportunity to the assessee on issues beyond the initial application, violates principles of natural justice and is liable to be quashed. The Court quashed the impugned assessment order and remanded the matter back to the respondent for fresh consideration, directing the issuance of a fresh show cause notice within two weeks, allowing the petitioner two weeks to submit objections, and directing the respondent to pass final orders within eight weeks after affording sufficient opportunity, including a personal hearing.

Facts

M/s.VTM Limited (Petitioner) filed a writ petition challenging a provisional assessment order dated 14.10.2016 passed by the Assistant Commissioner (Commercial Taxes) (Respondent) for the tax period 2014-15. The Petitioner contended that the order was passed after the end of the assessment year (31.03.2015), violating principles of natural justice and a previous High Court judgment. They also argued that the order, passed pursuant to a refund application under Section 18 of the TNVAT Act, improperly dealt with other issues like Input Tax Credit (ITC) reversal without sufficient opportunity. The Respondent countered that sufficient opportunity was given, the order was not provisional, and an alternate appellate remedy was available. They also stated that the ITC claim for export sales in Form-W was not in accordance with the Act and Rules, and the Petitioner failed to provide sufficient evidence for yarn waste sales.

Key Issues

1. Whether the provisional assessment order dated 14.10.2016, passed for the assessment year 2014-15, is liable to be quashed for being passed after the end of the assessment year, thereby violating the principles of natural justice and the ruling in W.A.Nos.1412 and 1413 of 2009 (M/s.Jothi Melters (India) Private Ltd. case)? 2. Whether the respondent violated the principles of natural justice by passing an assessment order that dealt with issues beyond the scope of the petitioner's refund application under Section 18 of the TNVAT Act, without affording sufficient opportunity to the petitioner to present objections and evidence? Petitioner's arguments: The Petitioner argued that the assessment order was passed beyond the statutory period for provisional assessments, citing the Division Bench judgment in M/s.Jothi Melters (India) Private Ltd. They further contended that the respondent violated natural justice by including issues like ITC reversal and exempted goods sale in an order originating from a refund application, without adequate opportunity. They also claimed that additional documents submitted were not considered. Respondent's arguments: The Respondent argued that the impugned order was not a provisional assessment order, making the cited precedent inapplicable. They also contended that an efficacious alternate appellate remedy was available, rendering the writ petition under Article 226 not maintainable. They asserted that sufficient opportunity was granted and the ITC claim was disallowed due to non-compliance with the TNVAT Act and Rules and lack of evidence.