2016 (4) TMI 1060 - HC - VAT and Sales Tax

Validity of notices of default assessment of tax and interest and the notice of default assessment of penalty - this Court had issued directions regarding the scope of the powers of the Value Added Tax Officer ( VATO ) under Sections 59 and 60 of the DVAT Act. By the order dated 24th February 2016, the Court had required the authorized representative ( AR ) of the Petitioner to appear before the VATO and produce all the documents as sought by the VATO. The AR of the Petitioner appeared before the AVATO on 29th February 2016 and produced the documents and information sought. Thereafter, the AVATO concerned did not call for any further information/clarification or response from the Petitioner. Held that - the detailed directions had already been issued by this Court in M/s. Gullu s v. Commissioner, Trade & Taxes 2016 (3) TMI 768 - DELHI HIGH COURT , this Court once again directs that the appropriate orientation and training courses be conducted by the Commissioner, VAT for the officers of the DT&T in the DVAT Act in light of the decisions of this Court including the one in Capri Bathaid Private Limited v. Commissioner, Trade & Taxes 2016 (3) TMI 378 - DELHI HIGH COURT . Accordingly, the impugned notices dated 14th and 15th March 2016 of default assessment of tax and interest and of default assessment of penalty issued by the AVATO, Ward No. 40, Delhi are hereby set aside and the matters are remitted to the AVATO concerned for a fresh determination after giving the Petitioner an opportunity of being heard and seeking whatever clarification/verification/information are required. - Petition disposed of

Summary

Issues:
Validity of default assessment of tax, interest, and penalty under Sections 32 and 33 of the Delhi Value Added Tax Act, 2004.

Analysis:
The judgment concerns a writ petition challenging the validity of default assessment notices issued by the Additional Value Added Tax Officer (AVATO) under Sections 32 and 33 of the DVAT Act. The court had previously issued directions regarding the powers of the VAT Officer and had required the petitioner's authorized representative to produce documents. Despite compliance, the AVATO did not seek further information. The court had also directed that no tax dues be collected during surveys or inspections. However, the petitioner received default assessment notices without an opportunity to explain the materials produced. The notices contained prejudiced expressions, indicating a predisposition by the AVATO. The court emphasized compliance with the law and directed training courses for officers. Consequently, the court set aside the default assessment notices and remitted the matters to the AVATO for a fresh determination after allowing the petitioner to be heard and provide necessary clarifications. The petitioner was instructed to appear before the VATO on a specified date.

This judgment highlights the importance of procedural fairness and adherence to the law in tax assessments. The court intervened due to the lack of opportunity given to the petitioner to explain the materials produced before the AVATO. The prejudiced expressions used in the notices raised concerns about the impartiality of the assessment process. By setting aside the notices and ordering a fresh determination, the court ensured that the petitioner's rights were protected and that due process was followed. The directive for training courses for officers underscores the significance of proper orientation in understanding and applying tax laws. Overall, the judgment emphasizes the need for transparency, fairness, and adherence to legal procedures in tax assessments to uphold the principles of natural justice and the rule of law.