2014 (4) TMI 177 - HC - VAT and Sales Tax

Remission of tax and penalty Whether non-registration is a bona fide error u/s 41(1) of Gujarat VAT Act Whether right to personal hearing provided u/s 41(1) - Held that - Section 41 (1) the VAT Act permits the State Government remit by an order either generally or specially, the whole or any part of the tax, penalty or interest payable in respect of any period by any dealer or a class of dealers of any specified class of sales or purchase - For exercise of power u/s 41(1) what is essential is that the Government should think fit that it is necessary to do so in the public interest in case of double taxation or to redress an inequitable situation or for sufficient and reasonable cause - All that the petitioner offered by way of explanation for his non-registration was a bona fide error which was even otherwise not acceptable - If under such circumstances, the Government did not find it appropriate to exercise power u/s 41 (1) of the Act - No need for interference - The contention that there was a breach of natural justice also cannot be accepted - It was not a case where the Government without putting the petitioner to notice passed an order which resulted into adverse civil consequences - It was a case where the petitioner made a representation which was not accepted by the Government - The insistence on personal hearing also has no legal base - It is well settled that requirement of hearing as a part of natural justice does not in all cases include a right to personal hearing - Decided against assessee.

Summary

Issues:
Challenge to rejection of application for remission of tax and further liabilities under Section 41 of the Gujarat Value Added Tax Act, 2003.

Analysis:
The petitioner, engaged in construction activities, shifted base to Gujarat without obtaining registration under the VAT Act. The Assistant Commissioner confirmed a tax demand, penalty, and interest. The petitioner applied for remission under Section 41 (1) of the Act, which was rejected by the State Government citing lack of registration as a reason.

The petitioner contended that registration was not a prerequisite for remission under Section 41 (1) and argued for a hearing based on a Supreme Court decision. However, the Court upheld the State Government's decision, noting the statutory requirement of registration for dealers liable to pay tax. The petitioner's explanation of a bona fide error for not registering was deemed insufficient.

Section 41 (1) allows the State Government to remit tax, penalty, or interest for specified reasons. The Court emphasized the necessity for public interest or reasonable cause for such remission. In this case, the petitioner's explanation did not meet the criteria for remission, and the Court found no grounds for interference.

The Court rejected the argument of breach of natural justice, stating that the petitioner's representation was considered by the Government, which was not obliged to provide a personal hearing. The decision emphasized that natural justice does not always entail a right to personal hearing.

Ultimately, the writ petition challenging the rejection of the application for remission was dismissed by the Court.