2016 (3) TMI 699 - HC - VAT and Sales Tax

Seeking of an opportunity of further hearing - Opportunity of hearing not provided on several aspects of the matter to justify the claim of the petitioners - Appellant engaged in construction and Engineering consultancy services - Held that - the original notice did not contain the grounds on which the assessment order has been passed thereby indicating the detailed objections filed by the petitioners and the relevant material produced has been completely over ruled and hence seeks that the entire order is unjustified. As the learned Government Pleader conceded that if the petitioner has not been given an opportunity of hearing on several aspects of the matter, he could be permitted to make his submission to the concerned authority in due course, so the opportunity of further hearing is provided and the impugned order is quashed. - Decided in favour of petitioner

Summary

Issues:
Assessment of tax liability under the Karnataka Value Added Tax Act and the Central Sales Tax Act for a government undertaking engaged in construction and engineering consultancy services.

Analysis:
The petitioner, a government undertaking engaged in construction and engineering consultancy services, claimed exemption under the Karnataka Value Added Tax Act and the Central Sales Tax Act for the assessment year 2009-10. The petitioner had executed a contract for a project involving various services for a specific company. The petitioner had carried out interstate sales supported by statutory certificates in Form C and E1, disclosing a substantial turnover. However, notices were issued by the Joint Commissioner of Commercial Tax, followed by the respondent, questioning the methodology of contract execution and proposing tax levies on the petitioner's turnover.

The petitioner responded to the notices, explaining the execution methodology and challenging the proposed tax levies. Despite the petitioner's submissions, the respondent issued further notices proposing tax levies and disallowing claims of transit sales. The petitioner objected to the notices, pointing out errors in the assessment and seeking additional time to provide detailed objections. However, the respondent proceeded with the assessment without further intimation, leading the petitioner to file a petition before the High Court.

The High Court noted that the assessment order lacked detailed grounds and overruled the petitioner's objections without proper consideration. The Court emphasized the importance of providing an opportunity for a hearing to the petitioner on all aspects of the matter before passing the assessment order. The Government Pleader, while objecting to the petitioner's claims, conceded that the petitioner should be given an opportunity for a hearing on various aspects of the matter.

Consequently, the High Court allowed the petition, quashed the impugned orders, and remitted the matter to the Assessing Authority for fresh consideration. The Court directed the Assessing Authority to provide a hearing to the petitioner and consider all relevant material before making further decisions in accordance with the law. The petitioner was instructed to appear before the respondent without further notice, and the State of Karnataka was to be impleaded as a party. The Government Advocate was directed to file a memo of appearance within two weeks.