2011 (1) TMI 1191 - HC - VAT and Sales Tax

Writ petition - contention that dealer not afforded opportunity to be heard not tenable - Held that - Even after the request made by the officers the petitioner did not produce the account books. After receiving the notice issued by the second respondent, the petitioner sent objections requesting an opportunity of personal hearing before concluding the proceedings, and also produced the books of accounts. During the hearing the petitioner s authorized representative was asked to explain the turnover relating to purchase of iron and steel from dealers situated outside the State. The authorized signatory then submitted a letter admitting that purchases of raw materials were not shown in the return, and requested to pass an order adding the incorporation value of 10 per cent on the purchase value. The letter belied the petitioner s only contention that it was denied a personal hearing before the assessment order was passed. The assessment order did not suffer from any error much less a grave error apparent on the face of the record warranting issue of a writ of certiorari to quash the assessment order, writ petition fails and is accordingly dismissed

Issues:
1. Denial of personal hearing in assessment proceedings.
2. Adequate opportunity for explanation in assessment proceedings.
3. Tax levy on undisclosed taxable event.
4. Violation of fundamental rights under Article 19(1)(g) of the Constitution of India.
5. Failure to avail of the statutory appeal remedy.
6. Filing a writ petition instead of utilizing the appeal/revision system provided under the VAT Act.
7. Expiry of the period of limitation for filing an appeal.
8. Allegation of obtaining a letter under duress during assessment proceedings.

Analysis:

1. Denial of Personal Hearing:
The petitioner contended that a personal hearing was denied, rendering the assessment order void due to a violation of natural justice principles. However, the court found that the petitioner was provided with an opportunity for a personal hearing as evidenced by a letter submitted during the proceedings. The court rejected the claim of denial of personal hearing, emphasizing that the petitioner's assertion lacked credibility and was an afterthought.

2. Adequate Opportunity for Explanation:
The petitioner argued that the assessment did not provide adequate opportunity as the taxable event was not properly communicated in the show-cause notice. The court examined the record and concluded that the petitioner was given a fair chance to explain discrepancies, as demonstrated by the submission of objections and explanations during the assessment proceedings.

3. Tax Levy on Undisclosed Taxable Event:
The petitioner contested the tax levy on purchases of iron and steel from specific dealers, claiming that these transactions were covered under declarations and not subject to taxation. However, the court upheld the assessment, stating that the turnover towards iron and steel was properly assessed for taxation as per the provisions of the VAT Act and Rules.

4. Violation of Fundamental Rights:
The petitioner alleged a violation of fundamental rights under Article 19(1)(g) of the Constitution of India. The court dismissed this argument, finding no merit in the claim and upholding the validity of the assessment order.

5. Failure to Avail Statutory Appeal Remedy:
The court highlighted that the assessment order was appealable under the VAT Act, and the petitioner had not pursued the statutory remedy of filing an appeal. The court emphasized the importance of utilizing the appeal mechanism provided by the law for redressal of grievances before resorting to writ petitions.

6. Utilizing Appeal/Revision System:
The court criticized the trend of VAT assessees bypassing the appeal/revision system and directly approaching the High Court with writ petitions. It emphasized the need to follow the statutory appeal process for effective resolution of tax-related disputes.

7. Expiry of Period of Limitation:
The court noted that the petitioner had filed the writ petition after the expiry of the statutory period for filing an appeal, rendering the petition liable for dismissal based on the limitation prescribed under the VAT Act.

8. Allegation of Obtaining Letter Under Duress:
The petitioner alleged that a letter submitted during the proceedings was obtained under duress. The court dismissed this claim, stating that there was no evidence to support the allegation and that such assertions were made without merit to avoid the statutory appeal process.

In conclusion, the court dismissed the writ petition, emphasizing the importance of adhering to the statutory appeal mechanism and rejecting the petitioner's claims of procedural irregularities during the assessment proceedings.

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