2015 (3) TMI 630 - HC - VAT and Sales Tax

Exparte assessment order - No notice served - No sale of goods, only Stock transfer - Violation of fundamental right - Relaxation in period of limitation - Applicable in order of reassessment passed by court in a writ petition - Held that - It ought to be kept in mind by the State that when the State is imposing such a huge liability of tax of approximately ₹ 90 Lakhs, more care should have been taken by the State to the notice upon the petitioner or upon the assessee. Not only orthodox methods of service of notice should have been followed, but, over and above the orthodox methods, the State should have served the notice upon assessee by sending any employee of the State. The State has several vehicles and persons with them. When such a huge liability of tax is imposed or is going to be imposed, the State should have served the notice upon the assessee by sending any responsible employee instead of passing exparte order. When there is more liability of amount of tax, more care should have been taken by the State, at least in following the procedure. It is rightly submitted by learned counsel for both the sides that if this Court will wait for affidavit to be filed by the State and, thereafter to be decided, it will take at least four weeks' time and, therefore, without wasting the time, we hereby quash and set aside the exparte order of assessment passed as well as quash and set aside the demand notice. Matter remanded back for a fresh decision after giving adequate opportunity of being heard. As a cumulative effect of the aforesaid facts and reasons, we hereby remand the matter to the Commercial Taxes Officer, Koderma Circle, Koderma to decide afresh the tax liability, if any, of the petitioner. The relaxation of the time limit as mentioned in Subsection 2 of Section 42 which is applicable in the case of appellate order or revisional order, is also applicable whenever any order is passed in the writ petition under Article 226 of the Constitution of India. - Decided in favour of appellant.

Summary

Issues:
Challenge against exparte assessment order under Jharkhand Value Added Tax Act, 2005; Violation of principles of natural justice; Arbitrariness of the impugned order; Breach of right of equality; Violation of Article 14 of the Constitution of India; Remand of the matter to the Commercial Taxes Officer for fresh decision; Time limit for passing the assessment order; Applicability of Section 42 of the Act, 2005; Fundamental rights of the petitioner; Cumulative effect of facts and reasons; Attachment of respondent authority.

Detailed Analysis:
The petitioner challenged an exparte assessment order passed by the Commercial Taxes Officer under the Jharkhand Value Added Tax Act, 2005, alleging a lack of opportunity to be heard and questioning the validity of the order on merit. The petitioner contended that the order was arbitrary, violated principles of natural justice, and breached the right of equality guaranteed under Article 14 of the Constitution of India. The petitioner argued that the transaction in question was a stock transfer, not a sale, and thus not subject to Value Added Tax. The petitioner sought a remand to the assessing officer for a fair assessment, emphasizing the importance of natural justice in tax matters (paragraphs 1-2).

The Court noted the absence of evidence that notice was served upon the petitioner before the assessment order was passed, highlighting the importance of proper notification in tax matters involving substantial liabilities. The Court criticized the exparte order and stressed the necessity for meticulous adherence to procedural requirements, especially in cases with significant tax obligations. The Court refrained from delving into the merits of the case but emphasized the need for a thorough and just assessment process (paragraphs 5-6).

In light of the arguments presented and the lack of notification to the petitioner, the Court decided to quash the exparte assessment order and remand the matter to the assessing officer for a fresh decision. The Court set a deadline of eight weeks for the assessing officer to pass the assessment order, considering the provisions of Section 42 of the Act, 2005, and the fundamental rights of the petitioner. The Court justified its decision by highlighting the violation of the petitioner's fundamental rights and the time-consuming nature of appellate or revisional proceedings (paragraphs 7-9).

The Court addressed the issue of time limitations for passing the assessment order, invoking Section 42 of the Act, 2005, to ensure that the assessing officer's decision would not be constrained by limitations. The Court emphasized the applicability of this provision in cases of remand following a writ petition under Article 226 of the Constitution of India. The Court also instructed that any existing attachment by the respondent authority would remain in place until the final assessment order was issued (paragraphs 10-12).

Concluding the judgment, the Court disposed of the writ petition and related applications, directing the assessing officer to decide afresh on the tax liability of the petitioner within the specified timeframe. The Court underscored the importance of a just and timely assessment process, ensuring the petitioner's rights were upheld throughout the proceedings (paragraphs 13-14).