Order without hearing - not fair, but Nokia has to still deposit Rs. 240 Crores
EVERYBODY knows about the Rs. 2400 Crore demand by Tamil Nadu VAT Department on Nokia India, on clearances from their SEZ, most of which were exports and so were outside the purview of VAT.
The issue before the Madras High Court was the TN VAT Department's demand without granting a hearing to the assessee, Nokia India.
As per the High Court, the short point for consideration was as to whether the Department passed the order under Section 22 (2) or 27 (2) of TNVAT Act and whether the requirement to afford an opportunity of personal hearing is different from issuing a show cause notice as contemplated under Section 27 (2) of the said Act. It is also required to be decided as to whether issuing a show cause notice would amount to sufficient opportunity of hearing.
The High Court observed, "The quasi judicial powers conferred on the assessing officer has to be exercised in a judicious, fair and objective manner without arbitrariness and subject to the rules of natural justice, including grant of personal hearing and recording of reasons for conclusions ultimately arrived at before rejection of an application for exemption or waiver or stay and the non-adherence to the aforesaid principle will offend Article 14 of the Constitution of India and also renders the very remedy available to the assessee a nugatory."
So, the High Court remanded the case to the Adjudicating Authority for fresh consideration.
Though case remanded, pre-deposit ordered: Though the case was remanded, which means the assessment orders are set aside, the High Court wanted to protect the Revenue at least to some extent.
Legal Corner Icon — the image was hosted by the publisher and was not captured.The High Court observed, "Even though the impugned orders are quashed, this Court, taking into consideration the demand notices issued by the first respondent are still valid, the effect of quashing the assessment orders will not totally take away the right of the first respondent to proceed further in the matter. Further, taking note of the fact that the transaction reported by the petitioner is huge, pertaining to foreign sale, which according to the petitioner is totally exempted, the question of deposit of any amount will not arise. At the same time, in the impugned orders of assessment, it has been clearly stated that certain documents have been produced in form C and F in which there are lot of differences. In fact, an argument was advanced by the Advocate General in this regard. A feeble attempt was made by the Senior counsel for the petitioners that the payment of tax relating to Rs.14crore alone may be due in respect of the above variation. Such an argument advanced on behalf of the petitioner will not by itself stop this Court to direct the petitioner to deposit some amount. If an appeal is filed against the impugned order, it will be a different aspect to be considered. Now, by virtue of this order, the first respondent is directed to re-consider the entire matter afresh. At the same time, the revenue also has to be safeguarded to some extent. In that view of the matter, out of the demand of Rs.2,400/- crores made by the revenue in the impugned orders of assessment, the petitioner is directed to deposit 10% of the tax amount thereof as a pre-condition for reviving the orders of assessment."
Even if the Rs. 2400 Crores was a fictional imaginary figure, the fact is that the assessee has to pay 10% of that illogical figure.
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