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2018 (12) TMI 486 - HC - VAT and Sales TaxService of notice - the Intelligence Officer set the petitioner ex-parte and issued the Ext.P5 penalty proceedings - principles of natural justice. Whether the petitioner has been served a statutory notice or in the alternative, whether there is any deemed service of notice on the petitioner? Held that - Given the penal consequence that flow from Ext.P6, I reckon the authorities could have taken a little more effort to ensure service of notice, for it has at its disposal the petitioner s alternative address, too. Indeed, the Government Pleader with access to the records could inform the Court that the petitioner perhaps has taken undue advantage of the system - also, nothing prevented the assessing authority to record that reason in Ext.P6 and then reckon it as a deemed service. Further, at variance from Ext.P6, the Department cannot supply fresh reasons at this stage. Impugned order set aside - matter remanded to the third respondent.
Issues: Violation of principles of natural justice in penalty proceedings under the Kerala Value Added Tax Act - Service of statutory notice to the petitioner - Deemed service of notice
In this case, the petitioner, a partnership firm registered under the Kerala Value Added Tax Act dealing in furniture, had its goods detained in transit in August 2015 and later provisionally released. Subsequently, penalty proceedings were initiated by the Department under Section 25(1) read with Section 42(2) of the KVAT Act, based on the petitioner's alleged non-response to notices from the State Tax Officer. The Intelligence Officer set the petitioner ex-parte and issued the penalty proceedings (Ext.P5), leading the petitioner to file a writ petition challenging the order. The petitioner's counsel argued that the Ext.P5 order violated the principles of natural justice as no notice was served on the petitioner. He pointed out that the Department had incorporated both addresses of the petitioner in a previous notice under Section 47 of the Act, indicating that the officials should have served the notices on the second address after the postal endorsement on the first address stated that the establishment was closed. On the other hand, the Government Pleader contended that the petitioner had received the notice, reviewed its contents, and then influenced the postman to return the notice with a closed endorsement, as per the Department's records. The central issue revolved around whether the petitioner had been properly served a statutory notice or if there was a deemed service of notice. The impugned order, Ext.P5, had set the petitioner ex-parte based on the return of a notice by postal authorities with the endorsement 'closed.' The Court noted discrepancies in the addresses provided for the petitioner as both the consignor and consignee in the notice, suggesting that more effort should have been made to ensure proper service, especially considering the penal consequences involved. The Court set aside Ext.P5 and remanded the matter to the third respondent, directing the petitioner to appear before the Intelligence Officer on a specified date to proceed with the matter. Failure to appear would result in the revival of Ext.P5. Ultimately, the Court's decision highlighted the importance of ensuring proper service of notices in legal proceedings to uphold the principles of natural justice and prevent any party from taking undue advantage of the system. The remand order aimed to provide the petitioner with an opportunity to address the penalty proceedings effectively and in compliance with the statutory requirements under the KVAT Act.
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