2015 (9) TMI 535 - HC - VAT and Sales Tax

Issuance of notices under Section 59(2) of the Delhi Value Added Tax Act, 2004 - Held that - Two notices read together make out a very depressing story insofar as the functioning of the Department of Trade and Taxes, Government of NCT of Delhi is concerned. We had indicated that, on the one hand, on the same day, a notice for production of records on 26.06.2015 is issued and on the other hand, on that very day, the default assessment notices were issued in which it is stated that the dealer has not filed any reply / satisfactory reply. Apart from the fact that the principles of natural justice have been violated, there is also the serious concern that the notices under Section 59(2) of the DVAT Act as well as the default assessment notices have been system generated and have not, in fact, been human generated by the concerned VATOs. - On going through the circular dated 29.07.2015, a direction has been given for system generated orders. This is clearly in the teeth of our directions given earlier. Consequently, this circular is also quashed. Interestingly, before we part with this discussion of this circular, we note that the default assessment orders for the late filing of returns for the financial year 2015-16 for the fourth quarter is given as 30.09.2015 when the fourth quarter itself begins in January 2016. We deprecate such kind of mindless orders and circulars which has been issued by the respondent / Department. - Decided in favour of Assessee.

Summary

Issues:
- Issuance of notices under Section 59(2) of the Delhi Value Added Tax Act, 2004
- Violation of principles of natural justice
- Concerns regarding system-generated notices and default assessment orders
- Withdrawal of default assessment notices
- Quashing of system-generated notices and circular
- Directions for issuing fresh notices under Section 59(2)

Analysis:
The High Court addressed the common issue of notices issued under Section 59(2) of the Delhi Value Added Tax Act, 2004, which were all system-generated on 19.06.2015. The petitioners were required to produce documents by 26.06.2015, but default assessment notices were passed on the same day, alleging no satisfactory reply. The Court expressed concern over the violation of natural justice and the system-generated nature of the notices and orders. The default assessment notices were withdrawn, while the Section 59(2) notices were continued through letters issued on 17.07.2015. However, the Court held that both system-generated notices needed to be quashed, including the letters issued on 17.07.2015.

The Court considered a circular dated 29.07.2015 on 'Schedule for System Generated Orders' issued by the Additional Commissioner (System). Despite the circular, the Court found it contradictory to their earlier directions and quashed the circular. The Court criticized mindless orders, such as default assessment orders for late filing of returns for the financial year 2015-16 being dated before the quarter even began. Consequently, all Section 59(2) notices issued on 19.06.2015, which were system-generated, were quashed along with the circular dated 29.07.2015.

The judgment clarified that while the quashing of the notices and circular did not prevent the Department from issuing fresh notices under Section 59(2) after due consideration by the concerned VATO and in compliance with the law. The Court emphasized the importance of human interface in issuing notices and orders to ensure compliance with legal requirements. As a result, the writ petitions were allowed to the extent of quashing the system-generated notices and circular, with directions for issuing fresh notices under Section 59(2) with proper human involvement and legal adherence.