1967 (1) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
1. Lack of opportunity to explain entries in account books before provisional assessment.
2. Violation of principles of natural justice during assessment proceedings.
3. Legitimacy of filing a writ petition despite appealing against final assessment.

Analysis:

Issue 1: Lack of opportunity to explain entries in account books before provisional assessment
The petitioner, a businessman, alleged that they were not given a chance to clarify the entries in their account books before the Sales Tax Authorities conducted a provisional assessment. Despite the seizure of all account records during a raid, the authorities did not provide a reasonable opportunity for the petitioner to explain discrepancies in the figures. The petitioner's request for the return of seized records to file objections was ignored, leading to a provisional assessment being made without proper explanation from the petitioner.

Issue 2: Violation of principles of natural justice during assessment proceedings
The court emphasized the importance of adhering to principles of natural justice during quasi-judicial assessment proceedings. The petitioner argued that they were not afforded a fair opportunity to present their case before the provisional assessment was conducted. The court cited previous judgments highlighting that assessment proceedings should allow the assessee a genuine chance to review documents and provide explanations, ensuring a just and unbiased assessment process.

Issue 3: Legitimacy of filing a writ petition despite appealing against final assessment
Although the petitioner had filed an appeal against the final assessment, they maintained the right to challenge the lack of opportunity during the provisional assessment through a writ petition. The court acknowledged the petitioner's right to seek remedy under Article 226 of the Constitution, especially when principles of natural justice were violated. The court concluded that the Sales Tax Authorities should have stayed the final assessment pending the resolution of the writ petitions, allowing the petitioner to address the discrepancies in the assessment process.

In conclusion, the court found in favor of the petitioner, ruling that they were not given a reasonable opportunity to explain their accounts before the provisional assessment. The court held that the Sales Tax Authorities violated the principles of natural justice, granting the petitioner the right to challenge the assessment through a writ petition. The court allowed the petitions, making the rule nisi absolute, without any order as to costs.