2017 (12) TMI 1227 - HC - VAT and Sales Tax

Validity of reassessment order - the assertion made by the learned counsel for petitioner that an opportunity of hearing was not given - Held that - a perusal of the assessment orders dated 21.02.2017, and 01.03.2017, clearly reveal that while the Assessing Officer has noted the specific plea mentioned hereinabove, the Assessing Officer has not dealt with the said plea. In fact, the Assessing Officer has rejected the said plea by merely observing that the said plea is general in nature. The Assessing Officer is duty bound to give cogent reasons for rejecting the specific plea raised by the petitioner. However, the Assessing Officer has failed to do so - this Court has no other option, but to set aside the assessment order dated 21.02.2017, and the assessment order dated 01.03.20 17, and to remand the case back to the Assessing Officer - petition allowed by way of remand.

Summary

Issues:
Challenge to legality of reassessment orders dated 21.02.2017 and 01.03.2017 by M/s ALD Automotive Pvt. Ltd. under the Karnataka Value Added Tax Act.

Analysis:
The petitioner, a Private Limited Company, contested the reassessment orders dated 21.02.2017 and 01.03.2017 issued by the Assistant Commissioner of Commercial Taxes. The Assessing Officer calculated the petitioner's liability at ?1,33,81,696/- initially, which was later revised to ?80,22,757/-, including penalties and interest. The petitioner, engaged in the sale and leasing of motor vehicles, explained the tax treatment of leased vehicles, highlighting the carry-over of input tax credits against output tax liabilities arising in subsequent lease periods. Despite the explanation, the reassessment orders were issued, prompting the legal challenge.

The petitioner's counsel contended that the Assessing Officer denied a personal hearing, crucial for explaining the raised pleas, and dismissed a specific plea regarding the timing of leased vehicles' taxation without providing reasons. The core issue revolved around the timing of taxation concerning leased vehicles post-purchase, which the Assessing Officer overlooked without justification. The counsel argued that the orders lacked reasoning, essential for quasi-judicial decisions, affecting the rights of parties and necessitating appealable, reasoned orders.

In response, the revenue's counsel justified the Assessing Officer's actions, citing the petitioner's failure to submit correct returns promptly as a basis for the conclusions drawn. The court scrutinized the documentation and observed that while the Assessing Officer noted the petitioner's plea, it was summarily rejected as 'general,' without substantive reasoning. Emphasizing the importance of reasoned orders for upholding natural justice principles, the court concluded that the Assessing Officer's failure to provide cogent reasons necessitated setting aside the reassessment orders.

Consequently, the court overturned the reassessment orders dated 21.02.2017 and 01.03.2017, remanding the case to the Assessing Officer. The directive included granting the petitioner a personal hearing and addressing all raised pleas comprehensively. The Assessing Officer was instructed to issue a revised reassessment order within one month from the petitioner's appearance, scheduled for 12.06.2017 at 10:30 A.M.