2017 (4) TMI 1320 - HC - VAT and Sales Tax

Principles of Natural Justice - Legality of the re-assessment order - the first respondent has refused to rectify the re-assessment order interalia on the ground that sufficient opportunity had been granted prior to re-assessment and there was no error apparent on the face of the record that requires rectification - Held that - according to the impugned re-assessment order the petitioner was not only issued with notices which were duly served upon the petitioner but twice the time was extended by the DCCT thus giving ample opportunities to the petitioner to produce the relevant documents and books. Since the petitioner did not comply with the notice the petitioner cannot be permitted to claim that an opportunity of hearing has been denied to it - there is no violation of principles of natural justice in the present case. Even if there is palpable illegality in the impugned order the same palpable illegality can be pointed out by the petitioner before the Appellate Authority. It is for pointing out the illegality allegedly committed by the Assessment Officer that the Appellate Authority has been constituted by Law - Since an alternate remedy has been provided under Section 62 of the KVAT Act the petitioner is bound to first appear a This Court is of the firm opinion that this Court need not invoke its writ jurisdiction - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to legality of re-assessment order, endorsement date, garnishee notices, violation of natural justice, palpable illegality in the impugned order, requirement to exhaust alternate remedy.

Analysis:
The petitioner challenged the re-assessment order dated 07.04.2016 passed by the Deputy Commissioner of Commercial Taxes, Audit-4, which declared tax liability and imposed interest and penalty totaling Rs. 2,22,31,826. The petitioner also contested the endorsement date and garnishee notices issued for realizing the tax liability. The petitioner, a registered company under the Indian Companies Act and the KVAT Act, entered into sub-contracts for construction work. The petitioner claimed to have not executed any work during the financial year 2014-15 and filed returns declaring 'nil' taxable turnover. Despite extensions granted, the petitioner did not produce relevant documents due to the Managing Director's accident and subsequent hospitalization.

The petitioner argued that no opportunity of hearing was provided, violating principles of natural justice, and that the re-assessment order was illegal. However, the court found these arguments untenable. The court noted that notices were duly served, extensions were granted, and ample opportunities were given to produce relevant documents. It was stated that the Managing Director could have appointed a representative or legal counsel to appear before the DCCT, even in case of hospitalization. The court concluded that there was no violation of natural justice.

Regarding the palpable illegality in the order, the court emphasized that such issues should be raised before the Appellate Authority established by law. The court highlighted the importance of exhausting the alternate remedy provided under Section 62 of the KVAT Act before approaching the court. By circumventing the Appellate Authority, the petitioner was not permitted to rush to the court. Therefore, the court dismissed the petitions, stating that there was no need to invoke its writ jurisdiction based on the reasons provided.