2022 (2) TMI 1371 - HC - VAT and Sales Tax

Levy of penalty under section 25(AA) of KVAT Act - consequent proceedings - proceedings imposing penalty have already been challenged before this court and the subject-matter of pending proceedings - HELD THAT - On a perusal of the assessment order it is evident that the assessee had refused to avail the opportunity of personal hearing granted on November 29, 2021. It is also noticed that the proposal for assessment was based upon the unaccounted sales for the year 2015-16, which was brought to the notice of the assessee. The procedure adopted by the assessing officer shows that the officer had complied with the principles of natural justice. The pendency of writ petition as W. P. (C) No. 28713/2017 and the interim order of stay dated August 30, 2017 are confined to the penalty proceedings. As rightly observed by the assessing officer, the stay granted in W. P. (C) No. 28713/2017 is only against the recovery proceedings to realize the penalty imposed in the order under challenge in that writ petition. There was no restraint in the assessment proceedings initiated under section 25AA of the Act. There was no irregularity or absence of jurisdiction for the assessing officer to proceed to assess the petitioner - no jurisdictional error is caused in issuing the impugned order warranting an interference under article 226 of the Constitution of India - petition dismissed.

Summary

Issues:
Imposition of penalty and assessment order challenged simultaneously, availability of alternative remedy under statute, compliance with principles of natural justice in assessment proceedings.

Imposition of Penalty and Assessment Order Challenge:
The petitioner, running a metal crusher unit, faced penalty proceedings for the assessment year 2015-16, while challenging the imposition of penalty in a separate case. An interim stay was granted by the court. However, during this period, proceedings under section 25(AA) of KVAT Act led to an assessment order being issued. The petitioner contested the assessment, arguing that since the penalty imposition was already under challenge, the assessment proceedings should also be considered along with the pending writ petition.

Availability of Alternative Remedy:
The Government Pleader argued that the petitioner had the option to appeal under the statute, suggesting that pursuing this remedy was appropriate. It was highlighted that the assessing officer had considered the petitioner's objection, including the pendency of the writ petition, and provided reasons for continuing the assessment proceedings despite the stay granted in the writ petition.

Compliance with Principles of Natural Justice in Assessment Proceedings:
Upon review, the court noted that the assessee had declined the opportunity for a personal hearing and that the assessment proposal was based on unaccounted sales for the relevant year. The assessing officer's actions were found to be in line with principles of natural justice. The court clarified that the stay granted in the previous writ petition was specific to penalty proceedings and did not extend to the assessment proceedings under section 25AA of the Act. Consequently, the court determined that there was no irregularity or lack of jurisdiction in the assessing officer's decision to proceed with the assessment. Given the availability of an alternative statutory remedy, the court dismissed the writ petition, allowing the petitioner to pursue the statutory remedies.

In conclusion, the court found no jurisdictional error in the issuance of the impugned order and dismissed the writ petition, emphasizing the availability of an alternative remedy under the statute for the petitioner to address the assessment proceedings.