2017 (4) TMI 1198 - HC - VAT and Sales Tax

Correctness and legality of reassessment order - natural justice - Held that - there is no express reference to C Forms filed by petitioner on 28.02.2017 and 04.03.2017. The basis on which first respondent authority has proceeded to frame reassessment order is on the ground that there is no written reply filed by petitioner to proposition notice dated 22.02.2017 Annexure-D. Thus, there is a lack of opportunity to the petitioner in the proceedings before first respondent and impugned order is in clear violation of principles of natural justice - petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
Challenge to reassessment order under CST Act and KVAT Act, rejection of rectification application, violation of principles of natural justice.

Analysis:
The petitioner challenged the reassessment order dated 06.03.2017 passed by the first respondent under Section 9(2) of the CST Act and Section 36(1) of the KVAT Act, along with the rejection of the rectification application dated 20.03.2017. The petitioner, a registered company under the KVAT Act, faced reassessment for the tax period April 2015 to March 2016. The first respondent initiated reassessment proceedings and issued notices, proposing to disallow concessional rates of tax and exemptions due to lack of supporting documents. The petitioner submitted required documents and requested a personal hearing. Despite filing 'C' Forms covering inter-state sales, the first respondent passed the reassessment order without granting a personal hearing, leading to a tax demand of ?7,92,78,290.

The petitioner sought rectification of the order, arguing that 'C' Forms were already submitted before the local VAT Office but were not considered. The first respondent rejected the rectification application, citing the petitioner's failure to reply to the proposition notice within the stipulated time. The petitioner contended that the reassessment order violated principles of natural justice due to the lack of consideration of submitted documents and denial of a fair opportunity to present their case.

In the judgment, the court noted that the first respondent's actions indeed violated principles of natural justice. The court highlighted that the petitioner had filed 'C' Forms before the jurisdictional VAT Office before the reassessment order, which were not acknowledged in the order. Furthermore, the rejection of the rectification application without considering the grounds raised therein was deemed another instance of natural justice violation. The court allowed the writ petitions, quashed the reassessment order and consequential demand notice, and remitted the reassessment proceedings back to the first respondent for proper disposal in accordance with the law, emphasizing the importance of fair opportunity and due consideration of all relevant materials.

The court directed the petitioner to appear before the first respondent without further notice, filing objections and supporting documents, and instructed the first respondent to adjudicate the proposition notice on merits, considering all submissions and materials provided by the petitioner. The judgment underscored the significance of adhering to principles of natural justice in administrative proceedings and emphasized the need for a fair and transparent process in reassessment matters to uphold the rule of law.