1997 (1) TMI 488 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order under Karnataka Sales Tax Act, 1957 based on denial of natural justice and incorrect basis of decision.

Analysis:
The petitioner, a registered dealer under the Karnataka Sales Tax Act, challenged an order dated February 29, 1996, on the grounds of denial of natural justice and incorrect basis of decision. The petitioner contended that despite filing objections and requesting a personal hearing and an opportunity to present further evidence, they were not given a chance to do so, rendering the order invalid. The petitioner also argued that the order was based on a decision that had been overturned by the Supreme Court, making the basis of the order unreliable.

The Government Pleader for the respondents acknowledged the lack of a personal hearing and opportunity to present additional evidence but argued that it was unnecessary given the circumstances. The Government Pleader also disputed the petitioner's claim that the entire order was based on a specific court decision, stating that the revisional authority had considered various aspects before issuing the order.

The Court found that the order was indeed passed in violation of natural justice principles since the petitioner's request for a personal hearing and opportunity to present further evidence was ignored. Section 21 of the Act confers quasi-judicial power on revisional authorities, requiring them to provide the assessee with an opportunity to show cause against any proposed enhancement. As the petitioner was denied this opportunity, the Court deemed the order to be quashed.

The Court did not delve into the correctness of the petitioner's second argument regarding the basis of the decision, as the lack of natural justice sufficed to quash the order. The Court issued a ruling quashing the impugned order, remitting the matter back to the respondent for reconsideration with proper opportunity for a personal hearing and to present additional evidence. The petitioner was directed to appear before the respondent on a specified date, with all contentions left open for further argument.

In conclusion, the Court upheld the petitioner's challenge based on the denial of natural justice, leading to the quashing of the order under the Karnataka Sales Tax Act, 1957, and a directive for reconsideration with proper procedural safeguards.