2012 (12) TMI 359 - HC - VAT and Sales Tax

Writ petition Kerala Value Added Tax Act - violation of principles of natural justice alleged that without issuing any notice or hearing the petitioner, exhibit P9 assessment order was passed Held that - Assessment will be completed only if the assessment order is served on the assessee and any objection filed by the assessee disputing the assessment order should also be considered before completing the final assessment. If that principle is applied to the facts of this case, it can be seen that as on November 7, 2009 when exhibit P11 order was passed the first respondent should have taken into account the contentions raised in exhibit P8. Admittedly this was not done and for that reason exhibit P9 is vitiated - direct that the first respondent shall issue notice to the petitioner, hear them and pass fresh orders in the matter duly adverting to exhibit P8 objection filed by the petitioner also - in the event of passing fresh assessment order, it is for the first respondent to consider whether notice is to be issued under section 67 of the KVAT Act

Summary

Issues:

1. Challenge to assessment order and penalty under the Kerala Value Added Tax Act.
2. Violation of principles of natural justice in assessment proceedings.

Analysis:

Issue 1: Challenge to assessment order and penalty under the Kerala Value Added Tax Act

The petitioner, an assessee under the Kerala Value Added Tax Act, received various notices and filed objections against the assessment for the year 2007-08. A revised notice was issued, and subsequently, the first respondent completed the assessment and imposed a penalty. The petitioner challenged this order in a writ petition, alleging a violation of natural justice principles. The court quashed the assessment order and directed a fresh assessment after providing the petitioner with an opportunity to be heard. However, despite the petitioner filing objections within the specified timeline, a new assessment order (P9) was issued without considering the objections raised in the previous filing (P8). The court held that the assessment should consider objections filed by the assessee before finalizing the assessment. As a result, the court set aside the assessment order (P9) and directed the first respondent to issue a fresh notice, hear the petitioner, and pass new orders, taking into account the objections raised.

Issue 2: Violation of principles of natural justice in assessment proceedings

The petitioner contended that the assessment order (P9) was passed incorrectly, as objections were filed within the prescribed timeline, but the order was issued without considering these objections. The Government Pleader argued that the petitioner failed to appear for a hearing despite being given an opportunity within the specified period. The court noted that the objections were filed within the stipulated time frame, and the first respondent had acknowledged the receipt of objections. The court emphasized that the assessment process should include considering objections raised by the assessee before finalizing the assessment. As the objections were not taken into account in the assessment order, the court concluded that the order was flawed and set it aside. Additionally, the penalty notice (P11) was linked to the now-invalid assessment order (P9) and was also set aside as a consequence of quashing P9.

In conclusion, the court disposed of the writ petition by directing the first respondent to reconsider the matter, issue a fresh notice, hear the petitioner, and pass new orders, ensuring that objections raised by the petitioner are duly considered in the assessment process. The court clarified that the decision on issuing a penalty notice under section 67 of the KVAT Act would be at the discretion of the first respondent following the fresh assessment order.