2013 (2) TMI 650 - HC - VAT and Sales Tax

Failure to make assessment within the extended period - Held that - In the facts of the instant case the petitioner has been indisputably deprived of a reasonable opportunity of hearing which was a sine qua non for compliance of principles of natural justice and was expected from the assessing authority before taking its decision which may have an adverse consequences and the remedy of appeal available to the petitioner-assessee in the opinion of this court cannot be held to be effective remedy in the eye of law. The honourable Supreme Court in Whirlpool case 1998 (10) TMI 510 - SUPREME COURT has carved out three exceptions where the equitable jurisdiction of this court under article 226 of the Constitution could be invoked and one of the contingency referred to is the violation of principles of natural justice. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Reasonable opportunity of hearing.
2. Principles of natural justice.
3. Availability and effectiveness of alternative remedy.
4. Compliance with statutory deadlines under the RVAT Act, 2003.

Detailed Analysis:

1. Reasonable Opportunity of Hearing:
The petitioner, a public limited company registered under the Companies Act, 1956, challenged the assessment order dated September 28, 2012, for the assessment year 2009-10. The petitioner argued that it was not afforded a reasonable opportunity of hearing before the assessment order was passed. The court noted that the petitioner was served with a show-cause notice on August 1, 2012, and was provided with voluminous documents (over 7,000 pages) on September 10, 2012. Despite requests for additional time to review these documents, the assessing authority declined the requests and passed the assessment order on September 28, 2012. The court emphasized that reasonable opportunity of hearing is a cardinal principle of law and a sine qua non for compliance with the principles of natural justice.

2. Principles of Natural Justice:
The court held that the principles of natural justice were violated as the petitioner was not given adequate time to prepare a defense. The court highlighted that the pre-decisional hearing was an empty formality, and the assessing authority's actions deprived the petitioner of a fair hearing. The court referenced the Supreme Court's decision in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, which carved out exceptions where the violation of natural justice principles allows for the invocation of equitable jurisdiction under Article 226 of the Constitution.

3. Availability and Effectiveness of Alternative Remedy:
The respondents argued that the petitioner had an effective remedy of appeal under section 82 of the RVAT Act, 2003, and the writ petition was not maintainable. The court acknowledged that while an appeal could re-examine the material and potentially annul, reverse, modify, or quash the order, the remedy of appeal is effective only if reasonable opportunity of hearing was initially afforded. Since the petitioner was deprived of such an opportunity, the court held that the alternative remedy of appeal was not effective in this case.

4. Compliance with Statutory Deadlines under the RVAT Act, 2003:
The court examined the statutory deadlines under sections 24 and 25 of the RVAT Act, 2003, which mandate that assessments be completed within specified time limits, extendable by the Commissioner. The court noted that the assessing authority was under pressure to meet the deadline of September 30, 2012. However, this compulsion did not justify the denial of a reasonable opportunity of hearing to the petitioner. The court emphasized that the assessing authority should have initiated proceedings earlier to ensure compliance with statutory deadlines while affording the petitioner a fair hearing.

Conclusion:
The court allowed the writ petition, quashed the assessment order dated September 28, 2012, and remanded the matter back to the assessing authority. The parties were directed to appear before the assessing authority on March 11, 2013, with the petitioner given one month to submit its defense. The assessing authority was instructed to decide the matter afresh within three months in accordance with the law, ensuring that the petitioner is afforded a reasonable opportunity of hearing. No costs were awarded.