Anjappar Chettinad A/C Restaurant vs. The Asst Commissioner (St)

Facts

The petitioner, Anjappar Chettinad A/C Restaurant, a hotel business, filed a writ petition challenging an assessment order dated 11.11.2020 passed by the Assistant Commissioner (ST). For the financial year 2016-17, the petitioner reported a total turnover of Rs. 3,12,76,801/- and paid VAT at 2% under Section 7(1)(b) of the TNVAT Act, 2006. The respondent issued a notice on 23.03.2020, stating that the sale of food was liable to tax at 14.5%, not 2%, based on an audit objection. Due to the COVID-19 pandemic, the petitioner's restaurant was closed until May 2020, preventing a response to the notice. The respondent subsequently passed the impugned order without providing an opportunity for the petitioner to explain their case.

Held

The Court allowed the writ petition and set aside the impugned assessment order dated 11.11.2020. The Court found that the petitioner had not been given a reasonable opportunity to explain their case, particularly a personal hearing, as required by Section 27(4) of the Tamil Nadu Value Added Tax Act, 2006. The Court acknowledged the petitioner's submission that the restaurant was closed due to the COVID-19 pandemic, which prevented them from responding to the notice. The Court reasoned that a personal hearing is mandatory and its absence rendered the ex-parte order passed by the respondent illegal. The matter was remanded back to the respondent for fresh consideration, with a direction to provide a reasonable opportunity, including a personal hearing, and to pass appropriate orders on merits within three months. The petitioner was directed to produce available records during the personal hearing. The Court did not decide on the merits of the tax liability itself.

Key Issues

1. Whether the assessment order dated 11.11.2020 passed by the respondent is liable to be quashed for being arbitrary and illegal, in light of the petitioner not being afforded a reasonable opportunity to explain their case, as mandated by Section 27 of the TNVAT Act, 2006? Petitioner's Contention: The petitioner argued that before passing any assessment order, an opportunity must be given to the petitioner to explain their case. They relied on the decision in M/s DELPHI AUTOMATIVE SYTEMSP LTD Vs THE ASSISTANT COMMISSIONER(CT), CHENNAI (2018-VIL-99-MAD). The petitioner also contended that the pandemic situation led to the closure of their restaurant, preventing them from responding to the notice, and that the respondent passed the order without complying with Section 27(4) of the Act, which mandates personal hearing. Respondent's Contention: The respondent contended that an appeal remedy is available to the petitioner before the Appellate Deputy Commissioner(ST), Trichy, and therefore, the writ petition is not maintainable.