M/S.Sri Raman Textiles vs. The State Tax Officer-I
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The petitioner, M/s. Sri Raman Textiles, challenged an order dated 21.08.2019 passed by the respondent, the State Tax Officer-I. The respondent had issued a pre-revision notice on 05.08.2016, alleging that the petitioner had imported machinery worth approximately Rs. 1,09,56,528/- during the financial year 2014-15, which was not reported in their returns. The petitioner submitted a detailed reply, stating that the purchase was reflected in their audit report (Form-WW) and books of account, attributing the non-reporting to a bonafide mistake. The petitioner also contended that they were not given a personal hearing before the impugned order was passed. The impugned order was passed under the TNVAT Act, 2006.
Held
The Court held that the impugned order suffers from twin defects. Firstly, the respondent failed to deal with the objections raised by the petitioner in their reply dated 20.08.2019. The respondent's reasoning for brushing aside the petitioner's explanation was not elaborated upon in the impugned order, making it a non-speaking order. Secondly, the petitioner was not afforded an opportunity of personal hearing before the order was passed. The Court relied on the decision in G.V.Cotton Mills (P) Ltd. (Madras High Court) and Swami Devi Dayal Hospital and Dental College (Supreme Court), which emphasize the necessity of providing a personal hearing to the assessee, even in the absence of specific statutory provisions, unless expressly excluded. The ratio decidendi is that failure to consider objections and denial of personal hearing vitiate an order passed under the TNVAT Act, 2006. Consequently, the impugned order was quashed, and the matter was remitted to the respondent to pass a fresh assessment order after hearing the petitioner.
Key Issues
1. Whether the respondent authority failed to consider the objections raised by the petitioner in their reply dated 20.08.2019 and consequently passed a non-speaking order, violating the principles of natural justice and Section 22(2) of the TNVAT Act, 2006? 2. Whether the denial of a personal hearing to the petitioner before passing the impugned order is a violation of the principles of natural justice, as held in G.V.Cotton Mills (P) Ltd. vs. The Assistant Commissioner(CT) and Swami Devi Dayal Hospital and Dental College vs. Union of India? Petitioner's Arguments: The petitioner argued that their detailed reply explaining the purchase of machinery was brushed aside by the respondent. They contended that the purchase was reflected in their audit report and books of account, and the omission was a bonafide mistake, not suppression. Furthermore, the petitioner asserted that they were denied a personal hearing, which is a mandatory requirement under the principles of natural justice, even if objections were not submitted. They relied on the Division Bench judgment of the Madras High Court in G.V.Cotton Mills (P) Ltd. Respondent's Arguments: The judgment does not record any specific arguments made by the respondent. However, the respondent issued the impugned order which the petitioner is challenging.
Sections Cited
Section 22(2)
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Before: and
Heard the learned counsel for the petitioner and the learned Government Advocate for the respondent. 2.The petitioner is an assessee registered with the respondent. The petitioner was assessed under Section 22(2) of the TNVAT Act, 2006 on deemed assessment basis. Subsequently, the respondent issued pre-revision notice dated 05.08.2016 in which it has been alleged that the petitioner had imported machinery worth about Rs.1,09,56,528/-. in the year 2014-15 and that the same was not reported in the returns filed by the petitioner herein. In respect of the said revision notice, the petitioner gave a detailed reply. The specific stand of the petitioner is that since the petitioner is having the turn over of more than a crore of rupees, they have to necessarily file an audit report in Form-WW. In the said audit report as well as the books of account of the petitioner, the purchase has been clearly reflected. Therefore, the stand of the petitioner is that this is not a suppression and that it was only a bonafide mistake. Even though such a strong explanation has been given by the petitioner herein, the respondent chose to brush it aside in the following terms : 1/3 https://hcservices.ecourts.gov.in/hcservices/
That apart, the petitioner was not given any personal hearing before passing the impugned order. The issue is no longer res integra. The Hon'ble Division Bench of the 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 2/3 https://hcservices.ecourts.gov.in/hcservices/
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.“ 4.Thus, the order impugned in this writ petition suffers from twin defects. It has not dealt with the objections of the petitioner and the petitioner was not given any opportunity of personal hearing. On these two grounds, the order impugned in this writ petition is quashed. The writ petition is allowed. The matter is remitted to the file of the respondent to pass orders afresh in accordance with law after hearing the petitioner. No costs. Consequently, connected miscellaneous petition is closed. Assistant Registrar () //// / /2021 Sub Assistant Registrar(CS) skm 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 State Tax Officer-I, Commercial Tax Building, Sattur. +1 CC to SPL GP ( SR-5894[F] dated 18/02/2021 ) WP(MD)No.19229 of 2019 and WMP(MD)No.15609 of 2019 17.02.2021 VB (16.03.2021) 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.