2016 (9) TMI 1432 - HC - VAT and Sales Tax

Validity of assessment order - penalty - Held that - The penalty proceedings is an absolute of the assessment proceedings - If one were to decide assessment proceedings and penalty proceedings jointly, clear divergence among the materials and adjudicating process has to be reflected so that the order has to reflect the independent consideration of the assessment proceedings, as also, the question as to whether there should be a penalty order. The matters are remitted to the assessing authority to consider the assessment proceedings and penalty proceedings de novo after affording sufficient opportunity to the assessee - petition allowed by way of remand.

Summary

Issues: Assessment proceedings and penalty proceedings

Assessment Proceedings:
The High Court addressed the issue of assessment proceedings in the judgment. The Court noted a mixing up of proceedings as the assessment order was issued without considering the objections provided by the assessee. The Tribunal acknowledged this error but mentioned that the objections were considered during the penalty proceedings. The Court emphasized the importance of independently deciding assessment and penalty proceedings to ensure a clear divergence in materials and adjudicating processes. It highlighted that a penalty order is not merely a consequential order to an assessment proceeding. Consequently, the High Court set aside the assessment and penalty orders, directing the assessing authority to reconsider both proceedings de novo. The assessee was granted the opportunity to present further objections and materials, including oral hearings, in accordance with the law.

Penalty Proceedings:
Regarding penalty proceedings, the High Court stressed the need for a separate and independent consideration of penalty orders from assessment proceedings. The Court emphasized that a penalty order should not be treated as a mere consequence of an assessment proceeding. Therefore, the High Court set aside the penalty order and directed the assessing authority to conduct a fresh assessment of penalty proceedings along with the assessment proceedings. The assessee was instructed to appear before the assessing authority on a specified date to ensure due process and fairness in the proceedings. The Court mandated the assessing authority to conclude the proceedings within a specified timeframe to expedite the resolution of the matter.

Overall, the High Court's judgment focused on the necessity of distinct consideration of assessment and penalty proceedings to ensure procedural fairness and adherence to legal requirements. The Court's decision aimed to rectify the errors in the original proceedings by remitting the matters back to the assessing authority for a fresh assessment, providing the assessee with the opportunity to present their case effectively.