2008 (2) TMI 846 - HC - VAT and Sales Tax

Summary

Issues involved:
Assessment correctness challenged, lack of opportunity for personal hearing, violation of principles of natural justice.

Analysis:

The petitioner, a public limited company, challenged reassessment orders dated June 29, 2006, and demand notices issued by the first and second respondents under section 39(1) of the Act for the period April 2005 to November 2005. The petitioner contended that despite filing detailed objections and requesting a personal hearing, the first respondent did not provide a reasonable opportunity for the same. The petitioner argued that proper inquiry was not conducted in compliance with the relevant provisions of the Karnataka Value Added Tax Act, 2003. The petitioner sought relief from the court, asserting that if given an opportunity, they could have substantiated their case based on a judgment of the Division Bench of the court.

Upon hearing both parties, the court observed that the first respondent passed the reassessment orders without giving the petitioner sufficient opportunity to present their case. The court noted that the petitioner had explicitly requested a personal hearing to substantiate their case in the objections filed on March 17, 2006. The court found that the first respondent did not consider the petitioner's request for a personal hearing and failed to conduct a proper inquiry in strict compliance with the Act and Rules. The court agreed with the petitioner's argument that if given an opportunity, they could have relied on the judgment of the Division Bench of the court and substantiated their case regarding tax liability. Due to the violation of principles of natural justice and non-compliance with mandatory provisions, the court held that the impugned orders of reassessment and demand notices could not be sustained.

Consequently, the court allowed the writ petition in part, setting aside the reassessment orders and demand notices. The matter was remitted back to the first respondent for reconsideration with a direction to afford a reasonable opportunity to the petitioner. The first respondent was instructed to make a decision in light of the judgment passed by the Division Bench of the court and in strict compliance with the Act and Rules within three months from the date of the court's order. The Additional Government Advocate was given three weeks to file a memo of appearance for the respondents.