2011 (5) TMI 876 - HC - VAT and Sales Tax

Whether the said S. Harish is an agent of the petitioner? Held that - The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In appropriate cases, in spite of availability of an alternative remedy, the High Court may still exercise its writ jurisdiction, particularly, when the order impugned is opposed to the principles of natural justice. Since the proposition notice has not been served on the petitioner, no hesitation to hold that the order of assessment passed by the respondent is opposed to the principles of natural justice. Therefore, inclined to entertain this writ petition despite availability of alternative remedy of filing an appeal. In the result, the writ petition succeeds and it is accordingly allowed.

Summary

Issues involved:
Validity of assessment order, service of proposition notice, availability of alternative remedy, principles of natural justice.

Validity of assessment order:
The petitioner, a proprietorship concern registered under the Karnataka Tax on Luxuries Act, challenged the assessment order issued by the first respondent, which determined the tax payable for a specific period. The petitioner alleged that the assessment was based on assumptions and presumptions, arguing that the turnover was correctly declared and no suppression occurred. The petitioner contended that the assessing officer did not serve the proposition notice, and the inspection report did not reflect the true state of affairs. The High Court Government Pleader maintained that the assessment order was appealable under the Act, emphasizing the need for the petitioner to exhaust the available alternative remedy. The court examined the service of the notice and concluded that it was not served on the petitioner in accordance with the law, highlighting the importance of providing a reasonable opportunity for defense before passing an assessment order.

Service of proposition notice:
The court scrutinized the service of the proposition notice, noting discrepancies in the recipient of the notice and the lack of proper service on the petitioner as required by the rules. It emphasized the necessity of serving notices in accordance with the law to afford individuals the opportunity to defend themselves adequately. The court found that the failure to serve the notice on the petitioner violated the principles of natural justice, leading to the decision to entertain the writ petition despite the availability of an alternative remedy.

Availability of alternative remedy:
Although an alternative remedy existed for the petitioner to appeal the assessment order, the court exercised its writ jurisdiction due to the violation of natural justice principles resulting from the improper service of the proposition notice. The court clarified that the rule of exclusion of writ jurisdiction by the availability of an alternative remedy is discretionary, especially in cases where the impugned order contradicts natural justice principles.

Principles of natural justice:
The court emphasized the importance of upholding principles of natural justice in administrative proceedings, highlighting the necessity of providing individuals with a fair opportunity to defend themselves. It ruled in favor of the petitioner, quashing the assessment order, demand notice, and related notices, remitting the matter back to the first respondent for fresh disposal in accordance with the law. The court directed the first respondent to serve a copy of the proposition notice on the petitioner within a specified timeframe to ensure proper procedural compliance. The decision allowed the petitioner to file objections and directed a fresh assessment without influence from external reports, keeping all contentions on the merits open.