2019 (8) TMI 1483 - HC - VAT and Sales Tax

Principles of natural justice - Reassessment of tax - Section 28(1) read with Section 29 of the M.P. Commercial Tax Act, 1994 - sole issue raised on behalf of the petitioner is that the Assistant Commissioner (Assessing Officer) passed the order without affording an opportunity of hearing and without disclosing the material collected while forming an opinion for reopening the matter - HELD THAT - When the case at hand is adjudged on the anvil of law laid down in K.T. Shaduli Grocery Dealer 1977 (3) TMI 160 - SUPREME COURT , we are of the considered opinion that the Authorities concerned failed to discharge the duties cast on them under the provisions of the Act as much as without affording reasonable opportunity of hearing to the petitioner, the order of reassessment has been passed which cannot be sustained in the eyes of law. Petition allowed.

Summary

Issues:
Reassessment under Section 28(1) read with Section 29 of the M.P. Commercial Tax Act, 1994 without affording an opportunity of hearing and without disclosing the material collected; Failure to provide an opportunity of hearing and disclose collected material before issuing reassessment order; Violation of principles of natural justice in reaching conclusions for reassessment.

Analysis:
1. The petition challenged the reassessment orders dated 19.08.2004 and 24.01.2006 passed by the Assistant Commissioner, Commercial Tax, Gwalior, under Section 28(1) read with Section 29 of the M.P. Commercial Tax Act, 1994. The petitioner, a registered dealer in Vanaspati Ghee and Coconut in Madhya Pradesh, was subjected to reassessment for the financial years 1997-98, 1998-99, and 2000-01 based on alleged transactions with specific traders in Tamil Nadu.

2. The petitioner contended that the Assistant Commissioner passed the reassessment order without providing an opportunity of hearing and without disclosing the collected material. The petitioner denied the alleged transactions and argued that no opportunity was given to cross-examine the traders from whom information was collected. The Revisional Authority affirmed the reassessment without addressing these concerns, leading to the filing of the petition.

3. The Court noted that the Assistant Commissioner's order lacked analysis and merely mentioned information received from headquarters without sharing it with the petitioner. The Court emphasized the necessity of affording a reasonable opportunity of hearing to the assessee before reassessment, as mandated by Section 28(1) of the Act. The respondent failed to demonstrate that such an opportunity was provided or that the collected material was disclosed to the petitioner.

4. Referring to the decision in "State of Kerala Vs. K.T. Shaduli Grocery Dealer," the Court highlighted the importance of observing principles of natural justice in tax assessments. The Court emphasized the right to cross-examine witnesses and the duty to act fairly in quasi-judicial functions. The failure to provide an opportunity for cross-examination in the present case was deemed a violation of the petitioner's rights and a failure to discharge duties under the Act.

5. In conclusion, the Court quashed the impugned reassessment orders, citing the authorities' failure to afford a reasonable opportunity of hearing to the petitioner. The petitioner was granted all consequential benefits, and no costs were imposed. The judgment underscored the significance of adhering to principles of natural justice and providing a fair opportunity for parties to present their case in tax reassessment proceedings.