2018 (11) TMI 145 - HC - VAT and Sales Tax

Reopening of assessment - grievance of the petitioner is that the opinion of the Audit Party cannot constitute information, on the basis of which the Assessing Officer could reopen the assessment - principles of natural justice - Held that - The Assessing Officer could not reopen the assessment based on the opinion of Audit Party alone. The Assessing Officer has to independently record his view for such reopening, if he proposes to reopen and thereafter, notice has to be issued to the parties regarding such reopening and after considering their objections/representations in this regard, order has to be passed. Principles of natural justice - Held that - It is crystal clear that the representation of the petitioner dated 14.09.2009 was not at all considered by the respondent, before passing the impugned demand notice dated 12.01.2010 - the impugned demand notice cannot be sustained, since it is a clear violation of principles of natural justice. The matter is remitted back to the respondent for fresh consideration - petition allowed by way of remand.

Summary

Issues involved:
1. Petition seeking Writ of Certiorari to quash demand notice for interest on belated tax payment.
2. Validity of reopening assessment based on Audit Party's opinion.
3. Compliance with principles of natural justice in considering objections/representations.

Analysis:
1. The petitioner filed a writ petition seeking to quash a demand notice for interest on belated tax payment. The respondent passed the impugned notice based on the report of the Audit Party, despite the petitioner's claim of no default in tax payment. The petitioner argued that the Audit Party's opinion alone cannot justify reopening the assessment. The respondent, however, contended that the belated payment was brought to their notice by the Audit Party, and interest was levied after considering the petitioner's representation.

2. The Court acknowledged that the Assessing Officer cannot reopen the assessment solely based on the Audit Party's opinion. Citing a judgment from the Punjab and Haryana High Court, it was emphasized that the Assessing Officer must independently form a view for reopening, issue notice to the parties, consider objections/representations, and then pass necessary orders. In this case, the petitioner's objections were not considered before issuing the demand notice, violating principles of natural justice.

3. Consequently, the Court set aside the demand notice and remitted the matter back to the respondent for fresh consideration. The respondent was directed to independently record views for reopening, consider objections/representations, and pass orders within eight weeks. The Court clarified that it did not express any opinion on the merits, instructing the respondent to decide the issue on its merits and in accordance with the law while providing the petitioner with a fair opportunity for a personal hearing.

This detailed analysis of the judgment highlights the issues raised, legal arguments presented, and the Court's decision, ensuring a comprehensive understanding of the case and its implications.