2013 (3) TMI 573 - HC - VAT and Sales Tax

Stay to recovery seeked - rejecting the claim of the appellant that there was high sea sales - Held that - In the facts and circumstance of this case, the appellant is justified in contending that the appellant should not be driven to the alternative remedy as had the appellant been given a specific opportunity, she may have been able to explain her version and to establish the contention that there was indeed high sea sale as contemplated in law. A perusal of the orders would show that various defects have been found in the documents. The appellant was never asked to explain those defects. We are not concerned with the merits of the matter. We are concerned with the decision making process. When difficult questions arise, principles of natural justice would undoubtedly apply and interest of justice would indeed demand an opportunity of personal hearing being given to the parties. Unless the decision-maker has a closed mind a person with an open mind can always be persuaded to arrive at a correct decision by lending a hearing to the affected party. This is the substance of principle of natural justice. Accordingly, in the facts of this case, we would think that, the appellant should be given an opportunity of hearing treating the orders, exhibits P1 to P6, as notices served on him.

Summary

Issues:
Assessment and penalty imposed for alleged high sea sales, violation of principles of natural justice in assessment and penalty orders, applicability of principles of natural justice, justification for personal hearing before decision-making.

Analysis:
The appellant filed a writ petition challenging exhibits P1 to P6, which assessed and imposed penalties for the years 2009-10, 2010-11, and 2011-12, rejecting the claim of high sea sales. The single judge dismissed the petition, stating the remedy was to file an appeal. The appellant argued a breach of natural justice principles, claiming documents were produced but not considered satisfactorily, leading to defects in assessment orders. The Government Pleader contended the appellant had opportunities and could appeal, denying any breach. The Court noted that natural justice principles are essential, providing equity in the absence of statutory provisions. The appellant claimed exemption under the CST Act, citing high sea sales, but the officer disagreed, invoking sections 25 and 67 of the Act. The appellant's objections were not fully addressed, leading to penalties without proper explanations provided. The Court emphasized the importance of a fair decision-making process, stating that principles of natural justice demand a personal hearing to ensure justice and fairness. The Court found that the appellant should have been given an opportunity for a hearing to explain their position, considering the defects found and the lack of explanations provided. The Court overturned the single judge's decision, directing the appellant to present objections to exhibits P1 to P6 and granting a hearing before a decision is made within a month. The Court differentiated this case from previous decisions, emphasizing the need for a hearing based on the specific circumstances, allowing the writ appeal and setting aside the previous judgment.