2015 (4) TMI 742 - HC - VAT and Sales Tax

Works contract - computation of taxable turnover - Claims of deductions on account of labour and services under various heads - Assessing Officer has failed to assign reasons as to why the claims narrated in its order towards the concluding part of the said order were allowed and more importantly no reason was ascribed for rejecting the balance claims made by the petitioner-Company - Held that - Assessing Officer has taken great pains in extracting various issues/heads of claims seeking deductions for computation of the taxable turnover. He has also taken much pain in extracting the silent features which the Hon ble Supreme Court has laid down in the case of Gannon Dunkerley & Co. Vs. State of Rajasthan & others, reported in 1992 (11) TMI 254 - SUPREME COURT OF INDIA as well as amendment made to Rule 6 clause (e) of the OVAT Rules, 2005 on 19.07.2012, but while allowing certain heads of expenses as held at page 17 of the order, he has not ascribed any reason either for accepting such deductions allowed by him nor any reason has been assigned for disallowing certain deductions. Consequently, we are in agreement with the learned counsel for the petitioner that the order impugned vis- -vis the disallowance of certain deductions made lacks reasons; and therefore lacks the foundation of the conclusion arrived at. Thus, the same is violative of the principles of natural justice; and as a consequence thereof we direct quashing of the same. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to assessment order under OVAT Act for the period 01.04.2005 to 31.03.2010; Requirement of assigning reasons by judicial and quasi-judicial authorities for accepting or refusing claims made by petitioner-assessee.

Analysis:
The writ petition challenged the assessment order under the Orissa Value Added Tax Act, 2004 for a specific period. The key issue raised during the hearing was the necessity for judicial and quasi-judicial authorities to provide reasons for accepting or rejecting claims made by the petitioner. The petitioner had claimed deductions for labor and services under various heads, which were detailed in the assessment order. The Assessing Officer referred to legal provisions and abruptly allowed deductions under certain heads while rejecting the rest without providing reasons for such decisions.

The petitioner argued that the Assessing Officer failed to justify why specific claims were accepted and others rejected, citing a Supreme Court decision emphasizing the importance of recording reasons for decisions by administrative authorities and tribunals. It was contended that the lack of reasoning in the assessment order violated principles of natural justice, rendering the order unreasonable. Consequently, the petitioner sought the quashing of the order.

The Revenue's counsel highlighted the availability of an appellate remedy for the petitioner and suggested that the petitioner should pursue that route instead of filing a writ petition. However, the court observed that the assessment order lacked adequate reasoning for the allowance or disallowance of deductions, thereby violating principles of natural justice. As a result, the court quashed the order and remanded the matter to the Assessing Officer for a fresh assessment, directing the petitioner to clarify any doubts regarding the claimed deductions. The court set a deadline for the completion of the fresh assessment and emphasized the importance of cooperation between the parties.

The court clarified that its decision to quash the order was not a judgment on the merits of the claims but was based on the procedural violation of natural justice. The petitioner was instructed to appear before the Assessing Officer for further proceedings. The writ petition was disposed of with these directions, ensuring the expeditious resolution of the matter while allowing the Revenue to seek an extension if needed.