2011 (8) TMI 1009 - HC - VAT and Sales Tax

Summary

Issues: Violation of principles of natural justice and interpretation of Section 15(2) of the Karnataka Entry Tax Act, 1979.

In this case, the appellant challenged an order passed by the revisional authority that set aside the decision of the Appellate Commissioner and reinstated the assessment order by the assessing authority on the penalty proposal. The appellant argued that the order was in violation of principles of natural justice and contrary to Section 15(2) of the Karnataka Entry Tax Act, 1979. The appellant received a notice under Section 15(2) on May 20, 2010, with 10 days to file objections. The objections were filed within the specified time frame, but the impugned order was passed on June 18, 2010, without giving the appellant an opportunity to substantiate their claim. The appellant contended that the order was passed prematurely, denying them the right to be heard. On the other hand, the Government Advocate argued that the notice clearly allowed for a personal hearing, and therefore, the appellant could not claim denial of the opportunity to be heard.

The court analyzed Section 15(2) of the Act, which grants the Additional Commissioner the power to call for and examine proceedings and pass orders enhancing, modifying, or canceling assessments after giving the assessee an opportunity to be heard. The notice issued to the appellant explicitly stated the right to file objections within 10 days and avail a personal hearing within that time frame. The court emphasized that the Additional Commissioner should have provided a personal hearing to the assessee after objections were filed, as mandated by the statute. The court found that the notice's wording did not fulfill the requirements for granting a personal hearing. Therefore, the impugned order, passed without affording a reasonable opportunity of being heard to the assessee, was deemed contrary to the law and principles of natural justice.

Consequently, the court allowed the appeal, setting aside the impugned order and remitting the matter back to the Additional Commissioner for a fresh hearing. The appellant was directed to appear before the Additional Commissioner on a specified date without waiting for further notice. The Additional Commissioner was instructed to hear the appellant or their representatives and then make decisions on the merits in accordance with the law.