2016 (9) TMI 719 - HC - VAT and Sales Tax

Principles of natural justice - Section 25 (1) of the KVAT Act, 2003 - chance to cross exaimne the witness - right to demand the materials on which reliance can be placed - Held that - it is for the assessing authority to decide whether the request seeking an opportunity for cross examination of other dealers is a move to drag on the assessment procedure or not. Purchase and sales suppression were detected by cross verification of purchase list and sales list uploaded with the data in KVTAIS and intercepting the vehicles of the petitioner thrice. Further, the finding is that petitioner was practicing parallel billing in order to evade tax. All the particulars have been mentioned in the order. Certain suppressions were even admitted by the petitioner. Perusal of the order indicates that the details of invoices in the purchase stock dealers alone were not the material relied upon and it is found that the request seeking opportunity for cross examination of other dealers is understood as a move to drag on the assessment procedure. Sufficient reasons had been stated to deny permission for cross examination. That apart, petitioner was unable to show that any prejudice has been caused on account of non providing such an opportunity. The Apex Court in CIT v. Chhabil Dass Agarwal 2013 (8) TMI 458 - SUPREME COURT held that the High Court must not interfere if there is an adequate efficacious alternate remedy available to the petitioner. Before entertaining any such writ petition, it has to be considered whether the petitioner has made out an exceptional case warranting such interference or there exists sufficient grounds to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to assessment order under Section 25(1) of the KVAT Act, 2003 based on violation of principles of natural justice.

Analysis:
The petitioner challenged Ext.P5 order, alleging a violation of natural justice principles due to lack of materials supply, no chance for cross-examination, and not being heard. The petitioner cited relevant judgments to support the contentions. The petitioner argued for the right to demand materials and cross-examination opportunity, emphasizing the violation of natural justice principles.

The assessing officer, as per Ext.P5, considered all issues, provided ample defense opportunities, and addressed petitioner's contentions. The assessing authority decided on the cross-examination request's validity, noting the petitioner's familiarity with dealers and lack of legal action against alleged invoice forgery. The court found no grounds for interference at this stage, suggesting appellate authority redressal for alleged prejudice due to lack of cross-examination or material supply.

Failure to permit cross-examination or provide relied-upon materials can violate natural justice principles. The court referenced Shaduli case, emphasizing the necessity of cross-examination when relying on dealer evidence from account books. In the present case, purchase and sales suppression were detected through various means, with the petitioner allegedly practicing parallel billing to evade taxes. Denial of cross-examination permission was justified, with no shown prejudice due to lack of opportunity.

Referring to CIT v. Chhabil Dass Agarwal, the court highlighted the need for an exceptional case or adequate alternative remedy for interference. No such situation arose in this case, leading to the dismissal of the writ petition. The judgment emphasized the importance of exhausting alternate remedies before invoking extraordinary jurisdiction under Article 226 of the Indian Constitution.