2013 (8) TMI 866 - HC - VAT and Sales Tax

Validity of assessment proceedings - notice for assessment not received - Violation of principle of natural justice - Held that - Inasmuch as admittedly the service of notice is not being in conformity with the prescribed procedure, we are of the opinion that the impugned assessment order is unsustainable being violative of the procedure prescribed for making assessment after service of notice and giving opportunity of hearing. Further, the penalty and interest are being consequences of the assessment order, the same also are liable to be set aside. Considering the facts of the case, we direct the petitioner to submit his objections treating the show-cause notice dated November 20, 2010 as a show-cause notice and file his objections on or before August 31, 2013 and thereafter the respondents shall carry on the assessment proceedings in accordance with law. The petitioner is also at liberty to urge the aspect of limitation also in the said proceedings. - Decided in favour of assessee.

Issues:
Assessment order validity based on notice service, compliance with prescribed procedure, opportunity of hearing, penalty and interest consequences, limitation aspect.

Assessment Order Validity Based on Notice Service:
The petitioner, a registered dealer under the Andhra Pradesh Value Added Tax Act, challenged an assessment order and penalty order for the periods 2006-07 to 2010-11. The petitioner claimed not to have received notices regarding the assessment proceedings. The court examined various documents showing addresses where notices were sent and found discrepancies in the service of notices. The court referred to Rule 64 of the Act, which prescribes the mode of service of orders and notices. As the service of notice did not comply with the prescribed procedure, the court held the assessment order as unsustainable for violating the procedure of notice service and providing an opportunity of hearing.

Compliance with Prescribed Procedure and Opportunity of Hearing:
The court emphasized that the assessment order, penalty, and interest were consequences of the assessment process and, therefore, unsustainable due to improper notice service. The court directed the petitioner to treat a specific show-cause notice as valid and submit objections by a specified date. It further instructed the respondents to conduct assessment proceedings in accordance with the law after the petitioner's submission of objections. The judgment highlighted the importance of following the prescribed procedure and providing a fair opportunity of hearing before making assessment orders.

Penalty and Interest Consequences:
The court ruled that since the penalty and interest were linked to the assessment order, they were also set aside due to the flawed assessment process. The judgment underscored that all consequences of the assessment order must align with the legal requirements, including proper notice service and opportunity for the taxpayer to respond adequately.

Limitation Aspect:
The petitioner's counsel argued that the proceedings were barred by limitation. Although not explicitly discussed in the judgment, the court's decision to set aside the assessment order and related penalties implied that the issue of limitation was considered within the context of the flawed assessment process. The court's direction for fresh assessment proceedings allowed the petitioner to raise the limitation aspect during the new assessment process, ensuring all legal aspects, including time limitations, are appropriately addressed.

In conclusion, the High Court of Andhra Pradesh held in favor of the petitioner, allowing the writ petition and setting aside the assessment order, penalties, and interest due to improper notice service and violation of prescribed procedures. The judgment emphasized the importance of following legal requirements, providing a fair opportunity of hearing, and ensuring all consequences of assessment align with the law. The court's decision granted the petitioner the chance to submit objections and participate in fresh assessment proceedings, addressing the limitation aspect if necessary.

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