2018 (3) TMI 1414 - HC - VAT and Sales Tax

Validity of assessment order - scope of SCN - input tax credit - Held that - the assessment order was passed based on facts, of which the petitioner was not informed in the show-cause notice issued to them earlier - The first respondent shall issue a notice afresh in Form VAT 305-A; give the petitioner an opportunity of being heard, and an opportunity of oral hearing; and, thereafter, pass a fresh assessment order in accordance with law at the earliest - petition disposed off.

Summary

Issues:
Assessment order disallowing input-tax credit claimed by the petitioner without proper notice or opportunity to be heard.

Analysis:
The judgment revolves around the assessment order passed by the first respondent disallowing the input-tax credit claimed by the petitioner. The petitioner, a registered dealer, was assessed to tax on a significant turnover, with a substantial amount of input-tax credit disallowed. The petitioner argued that irrelevant considerations influenced the assessment order, pointing out that they were not given notice or an opportunity to respond to specific allegations before the order was passed.

The counsel for the petitioner contended that the first respondent relied on information not disclosed to the petitioner, specifically a statement from a bank, without providing the petitioner a chance to address or refute this information. On the other hand, the Special Standing Counsel for Commercial Taxes argued that the petitioner failed to provide evidence of goods physically moving to them from the supplier, despite being informed in a prior notice about the requirement to substantiate such transactions.

The court acknowledged that the assessment order was based on undisclosed facts to the petitioner, emphasizing the importance of providing a fair opportunity to be heard before such decisions are made. Consequently, the court set aside the impugned assessment order and directed the first respondent to issue a fresh notice, allowing the petitioner a chance to present their case and have an oral hearing. The court mandated a fresh assessment order to be passed within a specified timeframe, ensuring due process and fairness in the proceedings.

In conclusion, the court disposed of the writ petition without costs, highlighting the necessity for procedural fairness and adherence to legal principles in tax assessment matters. The judgment underscores the significance of transparency, notice, and the right to be heard in administrative proceedings, emphasizing the need for authorities to provide adequate opportunities for affected parties to present their case effectively.