1995 (11) TMI 421 - HC - VAT and Sales Tax

Summary

Issues: Violation of principles of natural justice in assessment process

Detailed Analysis:
The petitioner, a retail dealer in fertilizers, had a certificate of registration authorizing him to deal in the sale of fertilizers within the State of Kerala. The petitioner claimed exemption on turnover for the year 1993-94, with a significant amount being second sales exempt from tax. However, the accounts were rejected through a pre-assessment notice refixing the turnover at a lower value, allegedly based on inter-State sales without proper verification. The petitioner responded to the notice, denying the transactions in question and requesting copies of declarations for participation in the proceeding. Despite the objections raised, an assessment order was passed without adequate opportunity for the petitioner to present his case.

The petitioner contended that the assessment order was ineffective until communicated and that the respondent failed to conduct necessary inquiries before making the assessment. It was argued that the respondent did not follow the required procedures, including the need for participation of the assessee and conducting detailed investigations before fixing liability. The petitioner highlighted the importance of complying with the principles of natural justice and statutory provisions, such as section 9(2) of the Central Sales Tax Act and section 17(3) of the Kerala General Sales Tax Act, in the assessment process.

In the judgment, it was observed that the impugned assessment order did not adhere to the principles of natural justice and lacked compliance with the necessary legal procedures. The court emphasized that the assessment process should involve the participation of the assessee and be conducted in accordance with the rules of natural justice. Consequently, the assessment order was quashed and set aside, with the proceedings remitted to the respondent for a fresh start, ensuring the petitioner is given a reasonable opportunity to participate in the assessment process after receiving prior notice.

The court's decision highlighted the significance of following the principles of natural justice and statutory provisions in the assessment proceedings to uphold fairness and procedural integrity. By setting aside the assessment order and directing a fresh assessment with due regard to natural justice principles, the court aimed to rectify the procedural shortcomings and ensure a fair and transparent assessment process for the petitioner.