2015 (1) TMI 1290 - HC - VAT and Sales Tax

Validity of exparte assessment order without giving any opportunity of being heard - service of notice - Jharkhand Value Added Tax Act, 2005 - it was contended that, there is no sale of the goods as mentioned in the exparte assessment order, but, it is stock transfer of machineries from different branches of the petitioner situated in different States - Held that - It ought to be kept in mind by the State that when the State is imposing such a huge liability of tax of approximately ₹ 90 Lakhs, more care shouldhave been taken by the State to serve the notice upon the petitioner or uponthe assesse Not only orthodox methods of service of notice should have been followed, but, over and above the orthodox methods, the State should have served the notice upon assessee by sending any employee of the State. The State has several vehicles and persons with them. When such a huge liability of tax is imposed or is going to be imposed, the State should have served the notice upon the assessee by sending any responsible employee instead of passing exparte order. As a cumulative effect of the aforesaid facts and reasons, we hereby remand the matter to the Commercial Taxes Officer, Koderma Circle, Koderma to decide afresh the tax liability, if any, of the petitioner. The relaxation of the time limit as mentioned in Subsection 2 of Section 42 which is applicable in the case of appellate order or revisional order, is also applicable whenever any order is passed in the writ petition under Article 226 of the Constitution of India. Hence, there is no question of limitation whatsoever arises in this case, if the assessing officer is deciding within the time limit, as stated in Subsection 2 of Section 42 of the Act, 2005. - Decided in favor of petitioner.

Summary

Issues:
Challenge against exparte assessment order under Jharkhand Value Added Tax Act, 2005.

Analysis:
The petitioner challenged an exparte assessment order imposed by the Commercial Taxes Officer under the Jharkhand Value Added Tax Act, 2005. The petitioner contended that no opportunity of being heard was provided, and the order lacked merit. It was argued that the transaction in question was actually a stock transfer, not a sale, thus not subject to Value Added Tax. The petitioner emphasized the violation of principles of natural justice, asserting arbitrariness and breach of fundamental rights under Article 14 of the Constitution of India. Citing Supreme Court decisions, the petitioner sought a remand to the assessing officer for a fair assessment. The Court acknowledged the absence of notice served to the petitioner before the assessment order and criticized the lack of care by the State in such a significant tax liability case. The Court highlighted the importance of proper notice procedures to avoid exparte orders and emphasized the need for correct facts and documents in assessment processes.

The State suggested alternative remedies of Appeal or Revision under relevant sections of the Act, highlighting the time-consuming nature of court proceedings. However, with the consent of both parties, the Court proceeded for final disposal of the matter. The Court quashed the exparte assessment order and demand notice, remanding the case to the assessing officer for a fresh decision. The petitioner was directed to appear before the officer, who was instructed to pass the assessment order within eight weeks from the Court's order copy service. The Court discussed the period of limitation for assessment orders and the applicability of provisions under the Act in cases of violation of fundamental rights. It was decided that the assessing officer must decide the tax liability afresh without limitation constraints, considering the circumstances of the case.

The Court maintained the existing attachment until the final assessment order is passed, allowing for any attached amount to be set off against the assessee's final liability for the relevant year. Finally, the writ petition was disposed of along with related applications, providing clear directions for the assessing officer to conduct a fair and timely reassessment, ensuring compliance with procedural and constitutional requirements.