M/S.A.J.Steels, Rep. By Its vs. The Assistant Commissioner
Original PDF →Facts
The petitioner, M/s.A.J.Steels, is challenging an order dated 07.02.2017 passed by the respondent, The Assistant Commissioner (CT) (FAC), Mailamchandai-II Assessment Circle, Trichy. The impugned order pertains to the assessment year 2015-2016. The respondent had issued a pre-revision notice on 29.09.2016. The petitioner did not submit a response to this notice. Consequently, the respondent passed the final order confirming the proposals in the show cause notice. The petitioner, represented by its partner B. Abdul Jaleel, filed a writ petition seeking to quash the respondent's order. The petitioner's counsel stated that the petitioner would pay Rs. 10,000/- towards the tax demanded, without prejudice to their contentions, and had already paid 10% of the demand as per an interim order.
Held
The Court held that the impugned order dated 07.02.2017 passed by the respondent is liable to be quashed. The reasoning was based on the principle of natural justice, specifically the right to a personal hearing. The Court found that the respondent denied the petitioner an opportunity for a personal hearing on the ground that the petitioner had not responded to the pre-revision notice. This was contrary to the established legal position. The Court relied on the Division Bench judgment of the Madras High Court in G.V.Cotton Mills (P) Ltd. v. The Assistant Commissioner(CT), which clearly stated that failure to submit objections to pre-assessment notices does not give the assessing officer the right to deny an opportunity of personal hearing. The Supreme Court's observation in Swami Devi Dayal Hospital and Dental College v. Union of India was also cited, reinforcing the requirement of a hearing. The ratio decidendi is that a personal hearing must be afforded to the assessee even if they fail to respond to a pre-assessment notice, unless explicitly excluded by statute. The Court quashed the impugned order and directed the petitioner to pay an additional Rs. 10,000/- towards the tax demanded within three weeks, without prejudice to their contentions. The petitioner was also given four weeks to submit their objections, after which the respondent was to afford a personal hearing and pass fresh orders.
Key Issues
1. Whether the impugned order dated 07.02.2017 passed by the respondent is liable to be quashed for violation of the principles of natural justice, specifically the denial of a personal hearing, contrary to the provisions of the Tamil Nadu Value Added Tax Act, 2006? The petitioner argued that a personal hearing was not granted, and the respondent wrongly assumed that no hearing was necessary due to the petitioner's failure to respond to the pre-revision notice. The petitioner relied on the Division Bench decision of the Madras High Court in G.V.Cotton Mills (P) Ltd. v. The Assistant Commissioner(CT), which held that denial of personal hearing solely on the ground of non-submission of objections to pre-assessment notices is impermissible. The petitioner also cited the Supreme Court's observation in Swami Devi Dayal Hospital and Dental College v. Union of India, emphasizing the requirement of a hearing even in the absence of a specific statutory provision, unless expressly excluded. The respondent did not record any specific arguments against the petitioner's contention regarding the denial of personal hearing.
Sections Cited
Tamil Nadu Value Added Tax Act, 2006
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Cause title — parties, addresses and appearances
O R D E R Heard the learned counsel on either side.
The petitioner is a dealer registered with the respondent. The case on hand pertains to the assessment year 2015-2016. The respondent issued pre-revision notice dated 29.09.2016. It appears that the petitioner did not offer his response. Therefore, the respondent passed the impugned order dated 07.02.2017 confirming the proposal set out in the show cause notice. The same is assailed in this writ petition.
Even before commencing his argument, the petitioner's counsel submitted that the petitioner would pay a sum of Rs.10,000/- towards the tax demanded without prejudice to his contentions. He also pointed out that the petitioner has already paid 10% of the said demand pursuant to the condition imposed while granting interim order. This undertaking to pay a sum of Rs.10,000/- more is recorded.
Though the petitioner has not taken a specific plea, the learned counsel would contend that personal hearing was not granted. In the impugned order, there is no averment that personal hearing was granted. The respondent thought that since the petitioner did 1/3 https://hcservices.ecourts.gov.in/hcservices/
W.P.(MD)NO.7281 OF 2017 not respond to the pre-revision notice, there is no need to grant personal hearing. The Hon'ble Division Bench of Madras High Court in the decision reported in [2019] 60 GSTR 418(Mad) (G.V.Cotton Mills (P) Ltd., V. The Assistant Commissioner(CT), Avarayampalayam Assessment Circle, Coimbatore) held as follows:- “Denial of personal hearing:
The respondent denied the appellant opportunity of hearing only on the ground that objection was not given to the pre-assessment notices. Even if objection was not given, still the assessing authority was expected to post the matter for hearing by issuing notice to the assessee. In case the assessee fail to appear, it is open to the assessment authority to pass orders on merits. We make the position clear that the failure to submit objection to the pre assessment notice would not give a right to the assessment officer to deny opportunity of personal hearing to the assessee.
The Supreme Court in Swami Devi Dayal Hospital and Dental College v. Union of India MANU/SC/0873/2013 : [2013] 10 Scale 608 observed that even in the absence of a specific provision of giving hearing, the hearing is required in such cases, unless specifically excluded by a statutory provision.“
The aforesaid ratio clearly applies to the case on hand. In this view of the matter, the order impugned in this writ petition is quashed. This writ petition is allowed. The petitioner is directed to pay a sum of Rs.10,000/-(Rupees Ten Thousand only) more towards the tax demanded within a period of three weeks from the date of receipt of a copy of this order. This payment will be without prejudice to the petitioner's contentions. The remittance of 10% earlier and the payment of Rs.10,000/- would abide by the outcome of the present proceedings.
The petitioner is given four weeks from the date of receipt of a copy of this order to offer his objections. If the respondent is not satisfied with the same, he will afford an opportunity of personal hearing and thereafter, pass orders afresh in accordance with law.
This writ petition is allowed. No costs. Consequently, connected miscellaneous petition is closed. Assistant Registrar(CS-III) //// / /2021 Sub Assistant Registrar(CS) 2/3 https://hcservices.ecourts.gov.in/hcservices/
W.P.(MD)NO.7281 OF 2017 PMU Note: In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate/litigant concerned. To: The Assistant Commissioner (CT) (FAC), Mailamchandai-II Assessment Circle, Trichy – 20. +1 CC to M/s.S.KARUNAKAR, Advocate ( SR-8391[F] dated 03/03/2021 ) W.P.(MD)No.7281 of 2017 02.03.2021 MA(CO) TR(12.03.2021) 3P 3C 3/3 https://hcservices.ecourts.gov.in/hcservices/
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.