Case Law Details
Hotel Sun World Vs State Tax Officer (Madras High Court)
In a recent decision, the Madras High Court addressed a significant issue concerning the VAT orders issued against Hotel Sun World. The court found that the original orders lacked transparency and failed to provide essential evidence, leading to a directive for reassessment.
Hotel Sun World, operating a hotel and bar with separate VAT and GST registrations, faced VAT assessment orders for the years 2017-2018 through 2022-2023. An inspection conducted from December 8 to December 10, 2022, led to the issuance of show cause notices and personal hearing notices dated January 4, 2024, and February 16, 2024.
Petitioner’s Argument
The petitioner challenged the VAT orders, arguing that the assessment was conducted without providing the necessary documents, including the report from the Manager, TASMAC, regarding liquor purchases. Despite requests for these documents, the petitioner claimed they were not furnished, leading to a violation of natural justice principles.
Government’s Position
The government contended that the petitioner did not cooperate during the inspection and failed to engage adequately with the notices and hearings. This lack of cooperation was cited as a reason for proceeding with the assessment despite the petitioner’s objections.
Court’s Decision
The Madras High Court acknowledged the petitioner’s failure to file proper returns but noted that the assessment orders were flawed due to the non-provision of material evidence. As a result, the court decided to quash the impugned orders and remand the case for fresh assessment. The petitioner is required to deposit ₹30,00,000 with the department within 30 days of receiving the court order.
The impugned orders are to be treated as supplementary to the show cause notices. The department must provide the relied-upon documents to the petitioner within 30 days.
The petitioner will have 60 days to respond after receiving the documents. The first respondent must issue fresh orders within six months, ensuring the petitioner is heard and cooperates with the process.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this common order, all the six Writ Petitions have been disposed of.
2. In these Writ Petitions, the petitioner has challenged the respective assessment orders passed by the first respondent for the Assessment Years 2017-2018 to 2022-2023.
3. It is the case of the petitioner that he is running both a Hotel and a Bar and having a separate VAT and GST Registrations. As far the VAT Registration for the sales at the Bar is concerned, there was an inspection held between 08.12.2022 and 10.12.2022, which culminated in show cause notices to the petitioner for the respective Assessment Years and personal hearing notices dated 04.01.2024 and 16.02.2024.
4. It is the specific case of the petitioner that in response to the earlier notice for personal hearing, dated 04.01.2024, the petitioner had sent a request on 12.01.2024 asking the first respondent to furnish the report received from the Manager, TASMAC, for purchase of liquor. However, it has not been furnished. It is submitted that subsequently also, in response to the personal hearing fixed on 23.02.2024, vide notice dated 16.02.2024, the petitioner had requested for the documents. However, without furnishing the documents, the impugned orders have been passed.
5. It is submitted that a sum of Rs.2,62,284/- was also collected from the petitioner during the course of inspection between 08.12.2022 and 10.12.2022. It is submitted that the impugned orders suffer from violation of principles of natural justices and therefore, the same are liable to be interfered with by directing the first respondent to furnish the records, based on which, the impugned orders were passed.
6. On the other hand, it is the contention of the learned Government Advocate for the first respondent that even during the inspection, the petitioner did not co-operate with the Inspection Team and therefore, notices were issued, which were followed by two personal hearing notices, dated 04.01.2024 and 16.02.2024, fixing the date of hearing as 12.01.2024 and 23.02.2024, respectively. It is submitted that the petitioner did not co-operate with the Department and therefore, the impugned orders have been passed, confirming the demand pursuant to the notices issued to the petitioner.
7. I have heard the learned Senior Counsel for the petitioner, the learned Government Advocate for the first respondent and the learned Standing Counsel for the second respondent.
8. Although, the petitioner has been evading tax as it evident from the fact that no proper returns were filed by him for the respective Assessment Years in respect of the Bar run by him, the fact remains that the impugned orders have been passed without furnishing the materials, based on which, the demand has been confirmed by the impugned orders. Therefore, this Court is inclined to partly come to the rescue of the petitioner, by setting aside the impugned orders and remitting the case back to the first respondent to pass fresh orders on merits and in accordance with law, subject to the petitioner depositing a sum of Rs.30,00,000/- to the credit of the Department within a period of 30 days from the date of receipt of a copy of this order, as in the absence of proper records, the first respondent is entitled to confirm the demand by applying the best judgment method.
9. Therefore, to balance the interest of the parties, the petitioner shall deposit Rs.30,00,000/- as mentioned above within the above said period. The impugned orders, which stand quashed shall be treated as addendum to the show cause notices that preceded the impugned orders. The first respondent shall furnish the documents, which were relied upon for confirming the demand, to the petitioner within a period of 30 days. The petitioner shall file his reply within a period of 60 days thereafter.
10. The first respondent shall endeavour to pass fresh orders on merits and in accordance with law within a period of six months thereafter. Needless to state that the petitioner shall be heard. There shall be a direction to the petitioner to co-operate with the first respondent.
11. With the above directions, these Writ Petitions stand disposed of. No costs. Consequently, connected Miscellaneous Petitions are closed.
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