2014 (2) TMI 1429 - HC - VAT and Sales Tax

Seeking a direction to the Commercial Taxes Department, Government of Jharkhand, to levy Value Added Tax on the actual sale price and not on any hypothetical or assumptive price - Opportunity of hearing not provided - violation of principles of natural justice - HELD THAT - In the present case, this is not in dispute that the first notice was issued to the assessee on 18.2.2013 calling upon the petitioner to appear on 26.2.2013 and the impugned order has been passed on such first hearing date, that is, on 26.2.2013. An amount of Rs. 3,47,38,258.54 on account of tax and interest has been ordered to be paid by the petitioner. According to the petitioner, petitioner's representatives, namely Mukesh Kumar and Pawan Verma, appeared before the assessing authority, but without affording an opportunity to them, impugned order was passed. Per contra, according to the respondents, on 26.2.2013, neither the petitioner, nor the representatives appeared. Without going into the rival statements of the parties, since the impugned order dated 26.2.2013 has visited the petitioner with serious civil consequences, the petitioner should have been afforded sufficient opportunity at least by giving one more hearing to put forth their case. The impugned order has been passed in violation of the principles of natural justice, the matter is remitted back to the Assessing Officer for taking a decision afresh, after affording adequate opportunity of hearing to the petitioner-assessee - Petition allowed by way of remand.

Summary

Issues: Violation of principles of natural justice in passing the demand order.

Detailed Analysis:
1. The petitioner, a mining company, sought a writ to quash a demand dated 26.2.2013 and requested the Commercial Taxes Department to levy VAT on the actual sale price, not a hypothetical one. The company was accused of showing lower prices in invoices than the market rate, leading to a tax evasion notice under JVAT Act, 2005. The Assessing Officer passed the final order on 26.2.2013 without granting a proper hearing, resulting in a demand of Rs. 3,47,38,258.54.

2. Respondents argued that the company intentionally misrepresented sale prices, prompting the notice. On 26.2.2013, no defense was presented, leading to the order. The petitioner contended a violation of natural justice principles due to lack of a fair hearing and cited legal precedents supporting their claim.

3. The court heard arguments from both sides and reviewed the case documents.

4. The petitioner's counsel argued that the order violated natural justice principles by not granting adequate hearing time. They emphasized the need for due process before passing an ex-parte order, citing legal cases to support their stance.

5. The respondents' counsel countered, stating that the company could raise its concerns through the appellate process, rendering the writ petition unnecessary.

6. The court found merit in the petitioner's claim, noting the rushed nature of the demand order without pending proceedings, leading to a violation of natural justice principles.

7. Citing legal principles of natural justice, the court emphasized the importance of fair hearings and the consequences of failing to adhere to such principles. The court highlighted the need for decisions to not only be just but also be seen as just.

8. Concluding that the order breached natural justice principles, the court quashed the demand order and remitted the matter back to the Assessing Officer for a fresh decision, directing the petitioner to appear for a new hearing.