2019 (1) TMI 163 - HC - VAT and Sales Tax

Levy of tax - maintenance work - payment of wages for maintaining the canal which is pure labour work - imposition of penalty - opportunity of personal hearing not provided - scope of Circular No.7 of 2014 - principles of natural justice - Held that - Needless to say that when a notice of proposal was given in writing, it is for the petitioner to give a reply in writing - In this case, the petitioner has not made any such reply. However, apart from imposing tax, the Assessing Officer has also imposed penalty at the rate of 150% under Section 22(4) of the said Act. It is true that the notice of proposal indicated that the petitioner may appear before the Assessing Officer at his office on the date of filing their objection and failure to file the written objection or to appear for personal hearing within the specified date, will result in passing orders confirming the proposal. Therefore, it is evident that the Assessing Officer has not indicated any date of personal hearing even in the absence of any reply filed by the petitioner, more particularly, when the Assessing Officer has chosen to impose penalty. Circular No.7 of 2014 - Held that - This Court has considered the scope of the above circular in very many cases and observed that it is the duty of the Assessing Officer to provide such personal hearing. In this case, as it has not been done, this Court is inclined to remit the matter back to the Assessing Officer for redoing the assessment, however, subject to the condition that the petitioner shall pay 15% of the tax liability. Petition allowed by way of remand.

Summary

Issues Involved:
Challenge against assessment orders for assessment years 2013-14 and 2014-15; Levying tax on maintenance work and wages for laborers; Imposition of penalty without opportunity of personal hearing; Interpretation of Circular No.7/2014 regarding opportunity of personal hearing.

Analysis:
The petitioner contested the assessment orders for the mentioned assessment years, arguing against the tax on maintenance work and laborer wages, as well as the penalty imposition without a personal hearing opportunity. The respondent contended that the petitioner did not respond to the notice of proposal or utilize the personal hearing opportunity provided. The court noted the petitioner's liability dispute regarding tax payment but highlighted the absence of a written reply to the notice of proposal. The Assessing Officer imposed a penalty without specifying a personal hearing date, contrary to Circular No.7/2014 guidelines.

The court referenced Circular No.7/2014, emphasizing the requirement for a reasonable opportunity before passing orders and the necessity of a personal hearing, even if the dealer did not opt for it. It concluded that the petitioner was not afforded a personal hearing, leading to a violation of natural justice and setting aside the assessment orders solely on this ground. The court directed the matter to be remitted for fresh assessment orders after providing a proper personal hearing opportunity.

Considering previous cases, the court highlighted the Assessing Officer's duty to provide a personal hearing and decided to remit the matter back for reassessment, with the condition that the petitioner pays 15% of the tax liability. The court allowed the writ petitions, setting aside the impugned orders and remitting the matter to the Assessing Officer under specific terms and conditions, including payment of the tax liability and scheduling a personal hearing for fresh assessment orders within a specified timeframe.

In conclusion, the court allowed the writ petitions, setting aside the assessment orders due to the violation of natural justice and remitting the matter back to the Assessing Officer for fresh assessment orders with the petitioner required to pay 15% of the tax liability and undergo a personal hearing as per Circular No.7/2014 guidelines.