M/S.Hameed Agency vs. The Commercial Tax Officer

Held

The Court held that the Assessing Authority failed to adhere to the principles of natural justice. Specifically, the respondent did not provide the petitioner with the details of the information obtained from the website, which formed the basis for the proposed reversal of input tax credit. Furthermore, the respondent did not afford the petitioner an opportunity for a personal hearing before passing the final order. The Court relied on its previous judgment in Tvl. JKM Graphics Solutions Private Limited v. Commercial Tax Officer, Vepery Assessment Circle, Chennai, which emphasizes the mandatory requirement of providing personal hearing and conducting an intra-departmental enquiry when crystallizing proposals based on mismatches. The Court found that the impugned order was passed without following the settled procedures. Therefore, the order was set aside, and the matter was remanded back to the respondent for fresh consideration. The respondent was directed to conduct an enquiry regarding the mismatch, send a revised proposal to the petitioner calling for objections, and after affording a personal hearing, pass a fresh order on merits within six weeks.

Facts

The petitioner, M/s. Hameed Agency, a registered dealer under the TNVAT Act, engaged in the business of food products, filed a return for the year 2013-14. Upon scrutiny, the respondent, the Commercial Tax Officer, identified certain incorrect claims for input tax credit. A revision notice was issued on January 27, 2015. The petitioner did not file any objections. Consequently, the proposal was confirmed, and the input tax credit granted to the petitioner for the year 2013-14 was reversed by an order dated June 11, 2015. Aggrieved by this order, the petitioner filed a writ petition before the Madurai Bench of the Madras High Court.

Key Issues

1. Whether the Assessing Authority erred in reversing the input tax credit without providing the petitioner with the materials relied upon for the decision and without affording an opportunity for a personal hearing, thereby violating principles of natural justice? (Question of law and fact, concerning principles of natural justice and procedural fairness). Petitioner's arguments: The petitioner contended that the respondent relied on information obtained from a website, and the mismatch identified was the basis for reversing input tax credit. However, the respondent failed to provide the petitioner with the specific website data used and did not grant a personal hearing. This procedural lapse, according to the petitioner, renders the order unsustainable. Respondent's arguments: The judgment does not record any specific arguments made by the respondent. However, the respondent issued a revision notice and subsequently passed an order reversing the input tax credit.