1982 (2) TMI 288 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to assessment order and demand notice issued by Commercial Tax Officer.
2. Dispute regarding the tax liability calculation and assessment under the Karnataka Sales Tax Act.
3. Allegation of violation of principles of natural justice and statutory provisions.
4. Appeal against the order of the learned single judge.

Analysis:

Issue 1:
The writ petition challenged the assessment order and demand notice issued by the Commercial Tax Officer. The petitioner disclosed a gross turnover and taxable turnover in the return, but the assessing officer did not accept the return as complete and true. The tax liability was calculated higher than disclosed, leading to a demand notice. The petitioner sought to appeal the decision, but faced rejection due to unexplained delay. The contention raised was that the assessment order was essentially under a different section than claimed, leading to a violation of principles of natural justice and statutory provisions.

Issue 2:
The dispute centered around the calculation of tax liability under the Karnataka Sales Tax Act. The petitioner claimed that tax was liable to be paid at 2% for specific supplies, while the assessing officer applied a 6% tax rate to the entire turnover. The petitioner argued that the tax at 2% was based on statutory provisions and the supplies were made to a registered dealer for manufacturing purposes. The failure to notify the petitioner before enhancing the liability and providing an opportunity for representation was deemed a violation of natural justice and statutory provisions.

Issue 3:
The judgment highlighted the importance of providing a hearing before subjecting a part of the turnover to a higher tax rate than claimed by the assessee. The assessing authority was expected to issue a notice and allow the assessee to present her case before finalizing the tax liability. The learned single judge's decision to quash the assessment order and direct a fresh assessment after affording the assessee an opportunity for representation was upheld. The appeal contended that no notice was required for the assessment under a specific subsection, but the court maintained that the assessing authority should have given the assessee a hearing before taxing a part of the turnover at a higher rate than claimed.

Issue 4:
The appeal filed by the department against the order of the learned single judge was dismissed. The court upheld the decision that the assessing authority should have provided a hearing before determining the tax liability. The appeal argued against the necessity of a notice for the assessment under a particular subsection, but the court affirmed the importance of affording the assessee an opportunity to present her case. The dismissal of the appeal and the direction for parties to bear their own costs concluded the judgment.