1999 (4) TMI 584 - HC - VAT and Sales Tax

Summary

Issues Involved:
Assessment enhancement without opportunity granted under Orissa Sales Tax Act, 1947 for the assessment year 1996-97. Existence of alternative remedy through appeal before the Orissa Sales Tax Tribunal. Violation of principles of natural justice in the assessment process.

Analysis:
The main issue in this case was the enhancement of assessment without granting the petitioner an opportunity under section 12(4) of the Orissa Sales Tax Act, 1947. The impugned order was passed by the Assistant Commissioner of Sales Tax, Bolangir Range, Bolangir. The petitioner contended that the assessment was enhanced to its detriment without being given a chance to present its case. The records revealed that no opportunity was indeed granted to the petitioner before the enhancement was made.

The learned counsel for the Revenue argued that since the basis for enhancement was known to the petitioner, a separate notice was not required. It was also contended that there existed an alternative remedy through an appeal before the Orissa Sales Tax Tribunal, making the writ application not maintainable. However, the statutory provisions of the Act and the Rules clearly mandated the grant of a reasonable opportunity of showing cause against any proposed enhancement.

The High Court emphasized the importance of natural justice in such matters. The principles of natural justice require that the affected party must have a genuine opportunity to be heard and respond to the proposed enhancement. The Court cited the Swadeshi Cotton Mills case to highlight the necessity of a fair hearing and disclosure of materials relied upon against the party. In this case, the statutory mandate of granting an opportunity was not adhered to.

Regarding the exhaustion of alternative remedy, the Court clarified that while it is a general rule to exhaust statutory remedies before seeking a writ, exceptions exist, especially in cases involving a violation of natural justice. Since the petitioner was not granted an opportunity before the extra demand was raised, the Court entertained the writ application for adjudication.

The Court held that even if the statute did not specifically prescribe an opportunity before enhancement, the principles of natural justice must be upheld. The absence of a clear mandate to the contrary necessitates the application of natural justice principles. The appellate order enhancing the assessment was set aside, and the matter was remitted back to the Assistant Commissioner of Sales Tax to grant the petitioner an opportunity to show cause against any proposed enhancement.

In conclusion, the writ application was allowed, and no costs were imposed. The judgment was delivered by the Acting Chief Justice and Justice P.K. Mishra, who agreed with the decision.