2018 (1) TMI 867 - HC - VAT and Sales Tax

Principles of Natural Justice - petitioner has stated in the petition that an application for rectification of the mistake which is apparent according to her on the face of the record was not entertained. The rectification application is dated 14th July 2017 - The grievance is that the Appellate Authority as well in a short, cryptic and virtually unreasoned order dismissed the petitioner s appeal. Held that - Since the rectification applications are on file of the Assessing Officer and the petitioner desires to first press the same, we direct that the Assessing Officer shall consider the rectification application in accordance with law - In the event the rectification application is allowed then nothing would survive in the appeal which is filed before the Appellate Authority and depending upon the modifications or changes effected in the assessment order, the petitioner would have to decide whether to further challenge it. No opinion expressed on the merits of the controversy. Petition disposed off.

Summary

Issues:
Challenge to order passed by Assessing Officer and Appellate Authority under Value Added Tax Regulations.

Analysis:
The petitioner, an individual trader, challenged the assessment order passed by the Assessing Officer, which raised a demand of ?2,01,41,966. The petitioner claimed that the order was flawed due to non-observance of natural justice principles. Despite seeking rectification, the Assessing Officer refused to entertain the rectification application. Subsequently, the petitioner appealed to the Appellate Authority, which also dismissed the appeal without proper reasoning. The petitioner contended that both authorities failed to comply with principles of natural justice by not acknowledging the presence of the petitioner's representative, a Chartered Accountant.

In response to the petitioner's claims, the court examined various notices and documents related to the assessment process. The petitioner argued that the assessment was incorrect as it imposed a flat tax rate of 20% on all commodities, including diesel, which should have been taxed at a lower rate based on specific categories. The petitioner highlighted discrepancies in the assessment and requested rectification, which was not addressed adequately by the authorities.

The court noted that the Appellate Authority, being the final fact-finding body in the absence of a tribunal, failed to consider crucial aspects such as the correctness of the assessment, the petitioner's opportunity to present evidence, and the justification for applying a flat tax rate. Due to the lack of proper consideration of these issues, the court concluded that the orders needed to be quashed and set aside.

The court directed the Assessing Officer to review the rectification application and make a decision in accordance with the law. If the rectification is allowed, the existing appeal would be rendered moot, and the petitioner could file a fresh appeal based on the revised assessment. However, if the rectification is dismissed, the petitioner can pursue the existing appeals with a provision for a personal hearing and submission of all relevant records. The Appellate Authority was instructed to issue a new reasoned order, uninfluenced by previous observations.

In conclusion, the court ruled in favor of the petitioner, quashing the previous orders and providing a pathway for rectification and potential appeal based on the revised assessment. The judgment applied to all similar petitions, and no costs were awarded in the circumstances.