2016 (10) TMI 287 - HC - VAT and Sales Tax

Validity of order of Assessment - opportunity of being heard to the petitioner - Held that - the order passed by the Appellate Assistant Commissioner dated 30.08.2012, calls for interference and consequently, W.P.No.16057 of 2013, has to be allowed. The Assessing Officer misconstrued the scope of remand, misconstrued the effect of the payment of the tax made by the petitioner as per the direction of the Hon ble Division Bench resulting in an erroneous order. Therefore, unless and until, the defect is cured at the hands of the Assessing Officer, no purpose would be served in directing the Appellate Authority to consider the appeal petition inspite of this Court having come to a conclusion that the Appellate Authority s order dated 30.08.2012, is not sustainable. Therefore, necessarily, the assessment has to be redone and for which purpose, the matter requires to be remanded to the Assessing Officer. Matter remanded to the Assessing Officer, for fresh consideration, who shall afford an opportunity of personal hearing to the petitioner, hear the objections of the petitioner on all issues and redo the assessment in accordance with law - petition allowed - decided in favor of petitioner.

Issues Involved:
1. Whether the petitioner is estopped from challenging the order of assessment due to payment of the entire tax liability.
2. Whether the remand by the Appellate Authority was an open remand or restricted only to the levy of penalty.
3. Whether the Assessing Officer was justified in stating that the petitioner has already paid the entire tax.
4. Whether the Appellate Authority was justified in rejecting the appeal on the ground of functus officio.

Detailed Analysis:

Issue 1: Estoppel from Challenging the Order of Assessment
The court examined whether the petitioner is estopped from challenging the assessment order because they paid the entire tax liability as directed by the Hon'ble Division Bench. The court concluded that the payments made by the petitioner were conditional, intended to allow the petitioner to restart their business and pursue their appeal. The court emphasized that the Division Bench's order allowed a charge on the petrol bunk to secure the penalty until the appeal was resolved, indicating that the petitioner did not accept the tax liability. Therefore, the petitioner is not estopped from challenging the assessment order.

Issue 2: Nature of the Remand by the Appellate Authority
The court analyzed the remand order dated 17.10.2011 by the Appellate Authority, which directed the Assessing Officer to reassess the case with specific instructions to verify certain documents and claims. The court found that the remand was open, requiring the Assessing Officer to reconsider all issues afresh. The court rejected the respondent's argument that the appeal was limited to the penalty, clarifying that the remand order required a comprehensive reassessment.

Issue 3: Justification of the Assessing Officer's Observations
The court reviewed the assessment order dated 25.01.2012, where the Assessing Officer assumed that the petitioner had accepted the tax liability and contested only the penalty. The court found this assumption incorrect, as the petitioner's payment was conditional and without prejudice to their right to appeal. The court held that the Assessing Officer misinterpreted the scope of the remand and the effect of the petitioner's tax payment, leading to an erroneous conclusion.

Issue 4: Functus Officio and Rejection of the Appeal
The court examined the Appellate Authority's decision to reject the appeal on the grounds of functus officio, meaning the authority had exhausted its jurisdiction. The court found this rejection unjustified, emphasizing that the payment of tax did not prevent the petitioner from pursuing appellate remedies. The court reiterated that the remand was open and not restricted to penalty issues alone, thus the Appellate Authority's rejection was incorrect.

Conclusion:
The court allowed the writ petitions, setting aside the Appellate Assistant Commissioner's order dated 30.08.2012. The court remanded the matter back to the Assessing Officer for fresh consideration, directing a comprehensive reassessment with an opportunity for the petitioner to be heard on all issues. The court emphasized adherence to principles of natural justice and proper interpretation of remand scope. No costs were imposed, and connected miscellaneous petitions were closed.

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