2015 (7) TMI 1270 - HC - VAT and Sales Tax

Validity of proposition notice dated 14.8.2013 - Entertainment tax - notice was challenged on the ground that various material, on which the Department relied upon, were not provided along with the notice - Held that - A plain reading of the assessment order goes to show that in the order it is acknowledged that the assessee had filed its objections which are gone through and found untenable . Merely stating that the reply is untenable would not be sufficient. What was the reply to the show-cause notice and why the same was found to be untenable, has not been stated in the order. The order of assessment dated 29.10.2013 passed by the Entertainment Tax Officer, IV Circle, Bangalore deserves to be quashed solely on the ground that it has not at all considered the objections filed by the appellant/assessee to the proposition notice dated 14.8.2013 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to entertainment tax assessment order based on lack of consideration of objections raised in reply to proposition notice and violation of principles of natural justice.

Analysis:
In this case, the appellant, who organized a fashion show in Bangalore, received a proposition notice from the Department of Commercial Taxes proposing an Entertainment Tax on the sale of tickets and sponsorship fees. The appellant challenged the subsequent assessment order, arguing that the material relied upon by the Department was not provided with the notice and that their reply was not considered in the assessment. The appellant contended that the order lacked reasoning, did not consider their objections, and violated principles of natural justice by not addressing their response adequately.

The High Court analyzed the assessment order and found that it merely acknowledged the appellant's objections as "untenable" without providing any further explanation or justification for this conclusion. The Court noted that it was insufficient for the assessing authority to dismiss the objections without elaborating on the reasons for their decision. The Court agreed with the appellant's argument that issuing a notice alone was not enough; the reply had to be considered and addressed in the assessment order to ensure procedural fairness and adherence to principles of natural justice.

Consequently, the High Court quashed the assessment order dated 29.10.2013 on the grounds that it failed to consider the appellant's objections to the proposition notice adequately. The Court allowed the appeal and granted the appellant the opportunity to submit a further reply to the proposition notice, raising all objections previously raised. The Assessing Officer was directed to consider the reply, provide a hearing if necessary, and pass a reasoned and speaking order in compliance with the law promptly.

This judgment underscores the importance of procedural fairness, the duty of the assessing authority to consider objections raised by taxpayers, and the requirement for assessment orders to be reasoned and based on a thorough examination of the relevant submissions. It serves as a reminder of the principles of natural justice that must be upheld in administrative proceedings, particularly in matters involving tax assessments.