2018 (6) TMI 1129 - HC - VAT and Sales Tax

Assessment of escaped turnover - Service of notice - It is the case of the petitioner that there was no communication thereafter to the firm from the Department - principles of Natural Justice - Held that - True, in so far as one of the partners of the firm is doing business with others in the very same premises, they must have received Ext.P3 notice. But, that does not mean that they should always get the notices sent in that address - the case of the petitioner that Ext.P6 order is vitiated for noncompliance of the principles of natural justice deserves to be accepted - petition allowed.

Summary

Issues:
1. Assessment under the Kerala Value Added Tax Act.
2. Allegations of non-compliance with principles of natural justice in proceedings against the petitioner's firm.
3. Validity of the assessment order passed against the petitioner's firm.

Analysis:
1. The petitioner's firm, engaged in business as 'Vibgyor Digital Colour Lab,' ceased operations on 31.07.2011, as per communication (Ext.P1) to the first respondent. Subsequently, proceedings were initiated against the firm under Section 67(1)(c) of the Act in February 2012. The petitioner contended that no communication was received from the Department post their response (Ext.P4) to the notice. However, a notice under the Revenue Recovery Act was received for the amounts due under the Act, leading to the challenge of the assessment order (Ext.P6) dated 20/03/2017.

2. The Court acknowledged the communications (Exts.P1 and P4) submitted by the petitioner to the first respondent, emphasizing that if fresh proceedings were intended against the firm, notices should have been sent to the personal addresses of the petitioner and partners. Notably, the notice was issued to the business address of the firm, raising concerns regarding compliance with principles of natural justice. The Court highlighted that the firm's registration was still active, but receiving one notice did not imply acknowledgment of subsequent notices, especially when partners were conducting business at the same premises.

3. The Government Pleader argued that since the firm responded to Ext.P3 notice, they cannot claim non-receipt of subsequent notices, citing the active registration status of the firm. However, the Court opined that the mere presence of one partner at the business address did not justify presuming receipt of all notices. Consequently, the Court found merit in the petitioner's argument that the assessment order (Ext.P6) lacked compliance with natural justice principles. As a remedy, the Court allowed the writ petition, quashed Ext.P6 order, and directed the first respondent to reevaluate the proposal after granting the petitioner a proper hearing, scheduled for 28/02/2018.