2018 (9) TMI 240 - HC - VAT and Sales Tax

Non-service of order - it was stated that as the Managing Partner of the petitioner was busy taking care of his grandmother, Ext.P1 notice was not brought to his notice by the staff of the petitioner who received the same - Penalty u/s 67(1) of KVAT Act - Held that - The case of the petitioner, in the circumstances, that the Managing Partner of the petitioner was busy in taking care of his grandmother and consequently, the notice of hearing received from the first respondent was not brought to his notice by the staff members of the petitioner, is probable in the common course of human conduct - the interest of justice demands that the petitioner shall be given another opportunity to defend the proceedings initiated against them in terms of Exts.P6 and P7 notices - Petition allowed.

Summary

Issues:
Violation of provisions under Kerala Value Added Tax Act, 2003, imposition of penalty under Section 67(1) for the years 2015-16 and 2016-17, non-compliance with principles of natural justice in passing orders.

Analysis:

The petitioner, an assessee under the Kerala Value Added Tax Act, 2003, received notices proposing penalties for violations of the Act for the years 2015-16 and 2016-17. The petitioner raised concerns about not having received copies of seized documents to effectively defend against the allegations. Despite requesting time for submission of explanations after receiving the necessary documents, the hearing was scheduled without adequate time for preparation. The petitioner's Managing Partner's grandmother fell ill and subsequently passed away, causing a delay in being informed about the hearing scheduled on 15.12.2017. This delay was considered reasonable given the circumstances, and it was concluded that the petitioner should be given another opportunity to defend the proceedings initiated against them.

The Court noted that despite the petitioner not claiming ignorance of the hearing scheduled on 15.12.2017, the Managing Partner's family emergency warranted a reconsideration of the situation. Medical documents confirmed the grandmother's hospitalization and subsequent demise, supporting the petitioner's claim of being preoccupied with family matters during the critical period. In light of these circumstances, the Court found it appropriate to quash the previous orders and direct the first respondent to conduct a fresh hearing, allowing the petitioner to present all necessary documents on 01.02.2018. The judgment emphasized the importance of upholding principles of natural justice and ensuring a fair opportunity for the petitioner to defend against the allegations.

In conclusion, the High Court of Kerala ruled in favor of the petitioner, setting aside the previous orders and instructing a fresh hearing to be conducted with proper consideration of the petitioner's circumstances. The judgment highlighted the necessity of affording individuals a fair chance to present their case and defend against allegations, emphasizing the principles of natural justice in legal proceedings.