2016 (6) TMI 1189 - HC - VAT and Sales Tax

Natural justice - demand - The ground on which the challenge was made was that the order was passed without furnishing to the appellant the details sought for by her and requesting the extension of time for submitting her reply - Held that - the first respondent should have given such an information to the appellant, so that the appellant could have approached the Indian Oil Corporation Ltd and obtained the details. This was not done, and instead, the first respondent rejected the request made by the appellant and proceeded to pass Ext.P5 order of assessment fastening huge liability on the appellant towards tax and interest. This is untenable - Ext.P5 order was passed in violation of the principles of natural justice - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to assessment order under Section 25 of KVAT Act for tax due and interest - Violation of principles of natural justice in passing assessment order without furnishing details sought by appellant and refusing extension of time for reply.

Analysis:
The writ appeal stemmed from a challenge to an assessment order under Section 25 of the KVAT Act, demanding a substantial amount towards tax due for the assessment year 2014-2015 along with interest. The appellant contended that the order was passed without providing the details requested and denying an extension of time for reply. The single Judge dismissed the challenge, prompting the appeal.

Upon hearing arguments from both parties, it was noted that the assessment order alleged that the appellant, a dealer of LPG Gas, had suppressed turnover, relying on details from the KVATIS. The appellant had requested these details and more time to respond, but the order was issued based on information uploaded by the Indian Oil Corporation Ltd., not the appellant. The refusal to provide these details was justified by the respondents, claiming they should be obtained from the Corporation directly.

The Court found that the refusal to furnish the details and the subsequent order passing were unjustifiable, constituting a violation of natural justice principles. The Court opined that even if the details were to be obtained from the Corporation, the appellant should have been informed to do so. As a result, the assessment order was set aside without delving into the merits, emphasizing the importance of procedural fairness.

Considering that the appellant had acquired the necessary details from the Indian Oil Corporation, the Court directed the appellant to file a reply within four weeks to the assessment notice. Subsequently, the first respondent was instructed to re-examine the matter after providing the appellant with an opportunity to be heard, ensuring a fair process in reaching a decision.

In conclusion, the appeal was disposed of, highlighting the significance of upholding principles of natural justice in administrative proceedings, particularly in tax assessments, to safeguard the rights of the parties involved.