2018 (5) TMI 85 - HC - VAT and Sales Tax

Validity of reassessment order - demand issued in Form VAT-180 - grievance of petitioner is that three days of opportunity was provided to the petitioner- company to file objections - principles of natural justice. Held that - It is settled legal principle that principles of natural justice has to be complied with by quasi judicial authority while concluding the assessment/ reassessment. Providing of such opportunity is not a mere formality, reasonable opportunity has to be provided so that the assessee gets reasonable time to meet the contents of the notice or comply with the discrepancies pointed out in the notice. Indisputably, assessment proceedings were pending from 13.02.2015 when Form 275 was issued by the prescribed authority. The proposed tax in terms of the notice dated 24.03.2018 is based on fresh grounds which were not adverted to, by the prescribed authority in the earlier proposition notice. If so, providing three days time to the assessee cannot be construed as reasonable opportunity at any stretch of imagination. It is well settled by now that alternative remedy is not an absolute bar to entertain the writ petition under Articles 226 and 227 of the Constitution of India when the principles of natural justice are violated - the principles of natural justice being violated in passing the reassessment order impugned herein, relegating the petitioner-assessee to the appellate remedy would not be justifiable. Reassessment order as well as demand notice at Annexure-C are quashed - matter is remitted to the prescribed authority-Respondent No.3 to reconsider the matter after providing reasonable opportunity to the petitioner in accordance with law - appeal allowed by way of remand.

Issues Involved:
1. Validity of reassessment order dated 31.03.2018.
2. Compliance with principles of natural justice.
3. Adequacy of opportunity provided to the petitioner to respond to the final notice.
4. Maintainability of writ petition despite the availability of an alternative remedy.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Order Dated 31.03.2018:
The petitioner challenged the reassessment order dated 31.03.2018 issued by Respondent No.3 for the tax periods April 2011 to March 2012. The reassessment was initiated under Section 39[1] of the Karnataka Value Added Tax Act, 2003. The petitioner argued that the final notice dated 24.03.2018, which proposed disallowing sales return and treating the difference of excess tax collection as taxable, introduced new grounds not mentioned in the initial notice dated 14.06.2017. The court found that the reassessment order was based on fresh grounds and thus required reasonable opportunity for the petitioner to respond, which was not provided.

2. Compliance with Principles of Natural Justice:
The petitioner contended that the reassessment proceedings violated the principles of natural justice as they were not given adequate time to respond to the final notice. The court emphasized that "reasonable opportunity has to be provided so that the assessee gets reasonable time to meet the contents of the notice or comply with the discrepancies pointed out in the notice." The court found that the three-day period given to the petitioner was insufficient and did not constitute a reasonable opportunity, thus violating the principles of natural justice.

3. Adequacy of Opportunity Provided to the Petitioner:
The petitioner requested an extension until 30.03.2018 to submit the required documents and clarifications. However, this request was denied, and the reassessment order was issued on 31.03.2018. The court noted that the assessment proceedings were pending since 13.02.2015 and concluded that providing only three days to respond to the final notice was unreasonable. The court stated, "providing three days time to the assessee cannot be construed as reasonable opportunity at any stretch of imagination."

4. Maintainability of Writ Petition Despite the Availability of an Alternative Remedy:
The respondents argued that the petitioner should be relegated to the appellate authority for redressal of its grievance, suggesting that the writ petition was not maintainable. However, the court held that "alternative remedy is not an absolute bar to entertain the writ petition under Articles 226 and 227 of the Constitution of India when the principles of natural justice are violated." Given the violation of natural justice principles, the court found it justifiable to entertain the writ petition.

Conclusion:
The court quashed the reassessment order and the demand notice at Annexure-C, citing a lack of reasonable opportunity provided to the petitioner. The matter was remitted to Respondent No.3 for reconsideration after providing a reasonable opportunity to the petitioner to file objections within ten days. The prescribed authority was directed to pass a reassessment order in an expedited manner, ensuring compliance with the principles of natural justice. The writ petition was disposed of with these observations.

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