2016 (6) TMI 6 - HC - VAT and Sales Tax

Limitation for passing re-assessment order - Section 39 of the KVAT Act, 2003 - would have expired on 30.04.2016 and not on 30.03.2016 - Demand of tax - Breach of principles of natural justice - Denial of reasonable opportunity of defending the case - Held that - this Court considers it expedient to set aside the impugned order, dated 31.03.2016 and, directing the petitioner-assessee to submit its written objections and reply to the show-cause notice immediately by appearing before the Assessing Authority on 29.04.2016 itself, the Assessing Authority is permitted to pass fresh and revised re-assessment order on merits, in accordance with law, in his own wisdom, expeditiously. - Decided in favour of petitioner

Summary

Issues:
Challenging re-assessment order on grounds of breach of natural justice and denial of opportunity.

Analysis:
The petitioner filed writ petitions against the re-assessment order raising a demand of ?85,88,630 for the tax period April 2009 to March 2010. The petitioner requested 20 days to prepare objections, but the authority granted only until 25.03.2016. Another request for a 20-day extension due to holidays was rejected, leading to the impugned order on 31.03.2016. The petitioner challenged the order citing a denial of natural justice and lack of opportunity to defend.

The petitioner argued that the Assessing Authority misinterpreted the limitation under Section 40 of the Karnataka Value Added Tax Act, 2003. The authority's observation that the limitation expired on 30.03.2016 was contested, stating it should be 30.04.2016. Reference was made to a Division Bench decision emphasizing the importance of granting reasonable time for compliance to avoid denial of fair opportunity. The petitioner requested setting aside the order and permission to file a reply promptly.

The Government Advocate acknowledged the error in mentioning the limitation expiry date and agreed that there was no urgency to pass the order on 31.03.2016. The Court, without delving into the merits, set aside the impugned order and directed the petitioner to submit objections and reply by 29.04.2016. The Assessing Authority was instructed to pass a fresh order within three months, allowing the petitioner to present objections and reply on the specified date.

In conclusion, the writ petitions were allowed, setting aside the impugned order and granting the Assessing Authority three months to issue a fresh order. The petitioner was directed to appear with objections and reply on 29.04.2016. No costs were awarded, and the parties were to receive a copy of the order promptly.