2015 (12) TMI 425 - HC - VAT and Sales Tax

Validity of impugned notice - before passing the said orders, the petitioner was not afforded an opportunity to produce the records as contemplated in Section 22 of the Kerala Value Added Tax Act - Held that - While passing assessment orders, the 1st respondent Assessing Officer did not comply with the provisions of Sections 22 to 25 in the matter of service of notices to the petitioner as also affording the petitioner an opportunity of being heard. In the decision of this Court in Shamon s case 2015 (11) TMI 1142 - KERALA HIGH COURT , this Court has clearly indicated the procedure that has to be followed by an Assessing Officer before resorting to an assessment on best judgment basis. - Assessing officer did not comply with the procedure that is required to be followed before completing an assessment on best judgment basis - Petition disposed of.

Summary

Issues: Challenge against assessment orders due to lack of opportunity for the petitioner to produce records and non-compliance with procedural requirements.

In this case, the petitioner challenged assessment orders (Exts.P7 to P12) passed for the months of September to December, 2014, and January and February, 2015, during the assessment year 2014-15. The main contention was that the petitioner was not given an opportunity to produce records as required by Section 22 of the Kerala Value Added Tax Act (KVAT Act). The notice issued was considered composite, requiring the petitioner to produce records and show cause against the proposal for best judgment assessment within seven days. The petitioner argued that this procedure contradicted the provisions of the KVAT Act and a previous decision of the court.

The court found that the Assessing Officer did not adhere to the statutory provisions regarding service of notices and providing the petitioner with an opportunity to be heard before passing the assessment orders. Referring to a previous judgment, the court highlighted the importance of following a specific procedure before resorting to best judgment assessment. The court emphasized that best judgment assessment should only be conducted when attempts to finalize an assessment based on available material fail. The statutory provisions outlined the process to be followed, including issuing notices to dealers for discrepancies in returns, providing an opportunity to rectify, and issuing a separate notice for best judgment assessment if needed. The court noted that despite previous rulings discouraging the practice of issuing composite notices, revenue authorities continued to do so unfairly.

Based on the judgment and the non-compliance by the Assessing Officer in this case, the court quashed the assessment orders (Exts.P7 to P12) and directed the Assessing Officer to conduct a fresh assessment after hearing the petitioner. The petitioner was instructed to appear before the Assessing Officer, and the orders were to be passed within a month from the specified date. The writ petition was disposed of accordingly.