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2016 (1) TMI 185 - HC - VAT and Sales TaxDuty demand - Best Judgment assessment - Determination of taxable turnover - Held that - It will be seen from a perusal of Rule 38 that the procedure to be followed by an assessing authority, who deems it necessary to verify the books of accounts of an assessee prior to proceeding with the process of best judgment assessment, is to fist serve a notice in Form No.17 calling upon the assessee to produce the books of accounts or other records as evidenced to prove his turnover and tax liability as also the correctness of the stock statement, goods or turnover reported or the input tax credit or refund claim. Thereafter, either after going through the records produced by the assessee in response to the notice or in the event of the assessee not producing any records, the assessing authority is expected to take a decision as regards whether or not to proceed with the best judgment assessment in relation to the assessee. It is thereafter that, he is to issue the notice intimating the assessee of the proposal to complete the assessment on best judgment basis in terms of Section 25(1) of the KVAT Act. - Matter remanded back.
Issues involved:
Challenge against Ext.P6 order under the Kerala Value Added Tax Act for assessment year 2013-2014 based on lack of hearing, non-compliance with rules of natural justice, best judgment assessment procedure under Rule 38 of KVAT Rules 2005. Analysis: The writ petition challenges the Ext.P6 order passed by the assessing authority under the Kerala Value Added Tax Act for the assessment year 2013-2014, primarily on the grounds of not hearing the petitioner before passing the order. The petitioner contends that this lack of hearing violates the rules of natural justice, rendering the Ext.P6 order invalid. The court heard arguments from both parties and examined the facts and submissions. The court noted that the assessing authority had issued a proposal under Section 25(1) of the KVAT Act to the petitioner, granting time for objections and a personal hearing. However, the petitioner requested an adjournment for more time to reply and for a personal hearing, which was granted. Despite this, the petitioner did not file a reply or attend the hearing, leading to the passing of Ext.P6 order without the petitioner's input. The petitioner claimed inability to attend due to illness, but the court observed that notices were issued in accordance with Rule 38 of the KVAT Rules. The court analyzed Rule 38, which outlines the procedure for best judgment assessment by the assessing authority. The rule requires the authority to serve a notice (Form No.17) to the dealer to produce records for verifying turnover and tax liability before proceeding with best judgment assessment. If the dealer fails to prove the correctness of claims, the authority can proceed with best judgment assessment after providing a hearing. In this case, the court found that the notices issued to the petitioner were on the same day, violating the sequence required by Rule 38. As the petitioner was not heard before Ext.P6 order was passed, the court quashed the order and directed the assessing authority to conduct a fresh assessment for the petitioner for the relevant year after hearing the petitioner. The petitioner was instructed to appear with necessary documents, and the assessing authority was given a deadline to complete the assessment. In conclusion, the court disposed of the writ petition by setting aside Ext.P6 order due to non-compliance with the rules of natural justice and directed a fresh assessment with proper hearing in accordance with the provisions of the KVAT Act and the KVAT Rules 2005.
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