2014 (4) TMI 453 - HC - VAT and Sales Tax

Quashing of order and consequential Demand Notice - Writ of certiorari mandamus to direct the revenue to pass a fresh assessment order, after affording opportunity to the petitioner Held that - The authority has not acceded to the request of the petitioner to grant personal hearing - Although the authority has referred to the books of accounts but as the petitioner is going to be saddled with tax liability hearing of the petitioner is essential and Revenue has considered the answers given by the petitioner to the Inspection Report the impugned order and consequent demand notice set aside Matter remanded back to revenue for fresh opportunity to the petitioner of personal hearing and the authority may also summon such of the records as deemed necessary for taking final decision, Rule is made absolute - Decided in favour of assessee.

Summary

Issues:
1. Quashing of order and demand notice
2. Allegations of tax suppression
3. Lack of personal hearing opportunity

Analysis:

Issue 1: Quashing of order and demand notice
The petitioner, a partnership concern registered under the Karnataka Tax on Luxuries Act, sought a writ to quash an order dated 13.1.2014 and a consequent Demand Notice dated 13.1.2014. The petitioner also requested a mandamus for a fresh assessment order after being given an opportunity to present their case. The respondent, through the learned AGA Sri S.V. Giri Kumar, opposed the petition. The High Court noted the petitioner's registration and tax declarations but found discrepancies in the assessment process.

Issue 2: Allegations of tax suppression
The Assistant Commissioner of Commercial Taxes issued a notice to the petitioner alleging tax suppression after a visit to their business premises. The petitioner responded with detailed explanations and provided relevant documents to support their position. However, the Inspecting Authority's report did not consider the petitioner's reply, leading to a proposition notice for tax levy. The respondent authority issued the impugned order and demand notice without giving the petitioner a personal hearing, despite the petitioner's request for the same.

Issue 3: Lack of personal hearing opportunity
The High Court found that while the respondent considered the petitioner's responses to the Inspection Report, the lack of a personal hearing was a significant procedural flaw. The petitioner had requested a personal hearing and offered to provide additional documents for clarification, but the authority did not grant this opportunity. As the petitioner faced potential tax liability, the Court deemed a personal hearing essential for a fair assessment process.

In conclusion, the High Court set aside the impugned order and demand notice, remanding the matter back to the respondent authority. The Court directed the authority to provide the petitioner with a personal hearing and access to necessary records before making a final decision. The petitioner was instructed to appear before the authorities with all relevant documents on a specified date. The writ petition was allowed, granting relief to the petitioner.