VAT: A Fair Chance for Hearing Is Required, Not Just a Formality
Fact and issue of the case
The petitioner has filed the instant petition challenging the impugned orders of assessment and demand notice dated 26.03.2021 for the assessment years 2015-16, 2016-17 and 2017-18 (Annexure VII) under the Tripura Value Added Tax Act, 2004.
The petitioner is a dealer dealing in Electrical goods, Electronic goods, furniture and parts, Floor covering, kitchenware, Marble & Articles of Marble, Mosaic tiles, Chips & Powder Plywood, Veneer Plywood, Paints, Lacquers, Polishes, Enamels, Colours, Varnishes, Primers of all kinds, Air Conditioning plants, Air Conditioner parts & accessories in the State of Tripura. The petitioner also deals in parts and accessories. For the assessment years 2015-16 to 2017-18, the petitioner has filed his return of turnover in the State of Tripura along with all papers and documents. Thereafter there was no notice from the respondent state tax department and the petitioner for all intent and purpose was sure that the returns for the said years have been accepted along with papers and documents. However, all on a sudden, during the COVID period the respondent issued a show cause notice dated 24.09.2020 is suppression of previous notice issued under Section 31 of the Tripura Value Added Tax Act, 2004 on the ground that the petitioner was selected for audit
The petitioner has filed a reply dated 06.10.2020 along with photocopies of the documents. However the Respondent No.3 was not satisfied with the same and on the basis of suspicion and surmises, asked the petitioner to produce the original invoices. Since it was COVID period, the petitioner asked for four months time to bring and produce the original invoices which were at Mumbai and was badly hit by COVID. However, the respondent No. 3 without waiting for the invoices vide the assessment orders dated 26.03.2021, a demand notice was passed and order of assessment for the assessment years 2015-16 to 2017-18 issued notices of demand for the said years.
The petitioner have challenged the impugned orders of assessment dated 26.03.2021 for the assessment years 2015-16 to 2017-18 under the Tripura Value Added Tax Act, 2004 on the ground that all reasonable opportunities of hearing were granted to the petitioner before passing of the said assessment order. The petitioner therefore prayed for setting aside the impugned orders of assessment and notice of demand dated 26.03.2021 for the assessment years 2015-16 to 2017-18.
Observation of the court
The Assessing Officer cannot pass an order on the basis of pure suspicion and surmised without giving reasonable opportunity of hearing the case which is sought to be made out in the assessment order. In other words, though the Assessing Officer can make such inquiries, he must give an opportunity of being heard which is not an empty formality or ritual or a pretence. It is a valuable right granted to the assessees and, in fact, is an important safeguard against arbitrary assessments. It cannot be taken lightly by the authorities. The opportunity must be real and reasonable. If an assessee, who is asked to furnish certain particulars or submit explanations within a specified time, prays for further time stating his difficulties or reasons, his prayer should be considered judiciously. Sometimes, as in the present case, for assessment for a number of years are taken up together and the assessee is asked to appear and produce evidence in support of his returns. On consideration of the evidence produced by the assessee, the Assessing Officer might require some further particulars or information which might not be possible for the assessee to submit instantaneously, for various reasons. He may require reasonable time to furnish the same and pray for the same before the Assessing authority. Such prayers cannot be rejected at the threshold without considering the ground given by the assessee merely because the Assessing Officer is hard-pressed to complete the assessment by a specified date or for administrative expediency. Such a rejection would amount to denial of reasonable opportunity of hearing and vitiate the assessment. The Assessing Officer, after making all inquiries and giving reasonable opportunities of being heard to the assessee,
The Assessing Authority cannot pass an order merely on the basis of pure guess and suspicion and surmises. Applying the aforesaid principles of law to the facts of the present case, we find force in the contention of the petitioner that he was denied reasonable opportunity to adduce evidence in support of his returns and that the Superintendent of Taxes made the assessment of the turnover for the assessment years 2015-16 to 2017-18 merely without giving any reasonable opportunity, on pure guess and surmises without reference to any materials or evidence on record. To recapitulate the facts, the petitioner in this case was asked to furnish certain information for which he wanted time on the ground that assessments for four years were being taken up at a time and it was not possible during COVID period to bring the original invoices from Mumbai and thus his prayer was rejected. The petitioner was thus denied reasonable opportunity of hearing and on that score itself, the impugned order of assessment cannot be sustained as the same being made in violation of principles of natural justice.
The impugned orders of assessment dated 26.03.2021 as well as the notice of demand for the assessment years 2015-16 to 2017-18 stands set aside and the matter is remanded back to the concerned authorities to issue a fresh proceeding in accordance with law. This exercise shall be completed within a period of two months from the date of receipt of a copy of this order. In terms of the above, this petition is disposed of.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from hereGodrej-Boyce-Manufacturing-Company-Limited-Vs-State-of-Tripura-and-Others-Tripura-High-Court-1