1992 (2) TMI 346 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the assessment proceedings for the petitioner-company have become time-barred.
2. Whether the order dated August 31, 1987, staying the assessment proceedings, is null and void due to lack of prior notice and hearing.
3. The nature of the power to stay assessment proceedings: whether it is quasi-judicial, legislative, or administrative.
4. The applicability of principles of natural justice to the order staying assessment proceedings.

Detailed Analysis:

Issue 1: Time-Barred Assessment Proceedings
The petitioner contended that the assessment proceedings for the period from September 1, 1976, to August 31, 1984, had become time-barred as no valid order for stay was passed on August 31, 1987. The court examined the circumstances and evidence presented, including an affidavit by the Assistant Commissioner of Sales Tax, and concluded that the order was indeed passed on August 31, 1987. The court found no merit in the petitioner's argument that the delay in serving the order invalidated its issuance date.

Issue 2: Validity of the Order Due to Lack of Notice and Hearing
The petitioner argued that the order staying the assessment proceedings was null and void because it was issued without prior notice or an opportunity for the petitioner to be heard. The court acknowledged that assessment proceedings are quasi-judicial and typically require adherence to principles of natural justice. However, the court distinguished the function of staying assessment proceedings from the assessment process itself. It concluded that the power to stay proceedings is administrative in nature and does not necessarily require prior notice or a hearing, provided the order contains reasons and is served on the assessee.

Issue 3: Nature of the Power to Stay Assessment Proceedings
The court analyzed whether the power to stay assessment proceedings is quasi-judicial, legislative, or administrative. It examined various legal principles and precedents, including the distinction between legislative and administrative acts. The court determined that the power to stay assessment proceedings is administrative, as it is exercised to facilitate the completion of assessments in a just manner and is not directly related to resolving any dispute between the parties.

Issue 4: Applicability of Principles of Natural Justice
The court considered whether principles of natural justice, such as prior notice and a hearing, apply to the order staying assessment proceedings. It concluded that while the order must contain reasons and be served on the assessee, there is no requirement for prior notice or a hearing. The court reasoned that such orders might be necessary due to administrative exigencies, and involving the assessee in every instance would be impractical and unnecessary.

Conclusion:
The court dismissed the petition, holding that the assessment proceedings had not become time-barred and that the order dated August 31, 1987, was valid despite the lack of prior notice and hearing. The court clarified that the power to stay assessment proceedings is administrative and does not require adherence to principles of natural justice beyond recording reasons and serving the order on the assessee. The petition was dismissed with no order as to costs, and the ad interim relief was vacated.