Law of Natural Justice is Embedded with Quantification of the actual taxes to be paid

[Rakesh Singh]

2016 (1) TMI 280 - MADRAS HIGH COURT

Mc. Rennet Foods Pvt Ltd Versus Assistant Commissioner (CT)

In English law, natural justice is technical terminology for the rule against bias (nemo iudex in causa sua) and the right to a fair hearing (audi alteram partem). While the term natural justice is often retained as a general concept, it has largely been replaced and extended by the general "duty to act fairly". The basis for the rule against bias is the need to maintain public confidence in the legal system. Bias can take the form of actual bias, imputed bias or apparent bias. Actual bias is very difficult to prove in practice while imputed bias, once shown, will result in a decision being void without the need for any investigation into the likelihood or suspicion of bias.

In a case where petitioner moved an application under Section 84 of the TNVAT Act for the assessment years in question and the said petition was rejected without opportunity and gross violation of principles of natural justice according to learned counsel of the petitioner. Such order is liable to be set aside

The Issues:

• The petitioner company is a baker involved in the manufacture of both taxable and exempted bakery products and in addition to the manufacture of bakery products, it also involved in trading of branded bakery products of other companies. The petitioner is a registered dealer under TNVAT Act 2006 and CST Act, 1956.
• According to the petitioner, the petitioner had filed monthly returns under TNVAT Act , 2006 under Section 21 of the Act along with details of input tax credit claim, out put tax payable, ITC adjusted, ITC reversed and the balance of VAT payable. On 16.4.2014, the respondent issued a notice proposing to reverse ITC to an extent of ₹ 13,26,379/- on the sale of exempted bakery products. On 4.9.2015, the respondent issued a revision notice proposing to reverse the difference ITC amount of ₹ 9,31,107.00 under Section 19(12) of the Act for the assessment year 2012-2013 and also proposed to levy penalty at 50% on the differential ITC amount at ₹ 4,65,554/-. Therefore, the petitioner filed a detailed objections in their letter dated 26.09.2015 highlighting the difference in the amount of ITC, the exempted and total turnover adopted in the formula for the computation of reversal of ITC. Despite this, the respondent in its impugned proceedings dated 5.10.2015, by adopting ₹ 3,95,272/- as the actual amount of ITC reversed and paid, computed the balance amount of ITC liable for reversal as ₹ 9,46,848/- and levied penalty at ₹ 4,73,424/-.
• The petitioner herein filed a petition under Section 84 of the TNVAT Act to the respondent on 5.11.2015 stating that the revised order has been passed by mistake of law and mistake of fact of incorrect adoption of amount of ITC reversed and hence, it is liable to be rectified under Section 84 of the Act and requested the respondent to issue a revised order. The respondent had rejected the said petition filed by the petitioner by order passed in TIN/33040640221/2012-2013/RC/96/15 (AG) dated 16.11.2015, observing that the impugned order dated 5.10.2015 was passed after considering the objections and also providing an opportunity of personal hearing. Hence, the petitioner is before this Court.
• Learned counsel for the petitioner submitted that the impugned order contains errors apparent on the face of record and the same has been passed in gross violation of principles of natural justice without conducting an enquiry as contemplated under section 27(2) of the Tamilnadu Value Added Tax Act, 2006. He further submitted that if the respondent had conducted an enquiry under section 27(2) of the Act, the correct facts would have been placed before the respondent and hence the impugned order is passed in gross violation of principles of natural justice and therefore, the impugned order is liable to be set aside.

Held:

• After elaborate arguments, learned counsel for the petitioner submitted that it would be suffice if the petitioner is given an opportunity for production of all the documents for the purpose of quantifying the actual taxes to be paid, it would meet the ends of justice. For such prayer, there is no serious objection raised by the learned Additional Government Pleader(T).
• Pointing out certain errors apparent on the face of the record, the petitioner moved an application under Section 84 of the TNVAT Act for the assessment years in question and the said petition was rejected without opportunity. Further, in the impugned order dated 5.10.2015, no suppression of assessable turnover has been established. No enquiry as contemplated under section 27 of the TNVAT Act was conducted for imposing penalty. In view of the same, the impugned order is liable to be set aside, accordingly, the same is set aside. The petitioner is directed to file all the documents within two weeks from the date of receipt of a copy of this order. On such filing, the respondent is directed to consider the documents filed by the petitioner and pass appropriate orders on merits and in accordance with law after affording due opportunity to the petitioner. Such exercise shall be completed within a period of six weeks from the date of receipt of the documents from the petitioner. If the petitioner fails to avail this opportunity, it is open to the respondent to pass appropriate orders forthwith.
• The Writ Petition is disposed of in the above terms. Consequently, the connected M.P.No.1 of 2015 is closed.