2019 (2) TMI 301 - HC - VAT and Sales Tax

Levy of tax - maintenance and repair work on the buildings of PWD - payment of wages to the labourers which is pure labour work - Held that - This Court, at this stage, is not expressing any view on such contention since, the petitioner admittedly, has not filed any reply to the notice of proposal. On the other hand, it is stated that the petitioner personally went and met the Assessing Officer and explained him with details. 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. Imposition of penalty - Assessing Officer has not given an opportunity of personal hearing to the petitioner before imposing such penalty - principles of natural justice - Held that - 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. At this juncture, it is relevant to refer to a Circular issued by the Revenue in Circular No. 7 of 2014 - 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 disposed off by way of remand.

Summary

Issues:
1. Challenge against assessment order for the year 2014-15
2. Tax levy on maintenance and repair work on buildings of PWD and wages to laborers
3. Lack of opportunity for personal hearing before imposing penalty
4. Interpretation of Circular No.7/2014 regarding the right to personal hearing
5. Violation of principles of natural justice in assessment order

Analysis:
Issue 1: The petitioner contested the assessment order for the year 2014-15, particularly objecting to the tax imposed on maintenance and repair work on PWD buildings and laborers' wages. The petitioner argued that the Assessing Officer erred in levying tax on pure labor work without providing a fair opportunity for a personal hearing before imposing penalties.

Issue 2: The court noted that the petitioner disputed the tax liability related to maintenance work and laborer wages, emphasizing the lack of a written reply to the notice of proposal. Although the petitioner met the Assessing Officer in person, the failure to respond in writing was considered critical. The court highlighted the imposition of a 150% penalty under Section 27(3) of the Act, pointing out the necessity of following due process.

Issue 3: The judgment delved into the requirement for a personal hearing as per Circular No.7/2014, emphasizing the importance of granting dealers a reasonable opportunity before passing orders. The court found that the Assessing Officer failed to inform the petitioner of the date for personal hearing, leading to a violation of natural justice principles.

Issue 4: Considering the violation of natural justice, the court set aside the assessment order solely on this ground, refraining from delving into the merits of the contentions raised by the parties. The judgment highlighted the significance of affording a personal hearing as a fundamental aspect of fair assessment procedures.

Issue 5: Consequently, the court allowed the writ petition, remitting the matter back to the Assessing Officer for fresh assessment orders after providing the petitioner with a proper opportunity for a personal hearing. The judgment outlined specific terms and conditions for the petitioner to comply with, including paying 15% of the tax liability and responding to the notice of proposal within a stipulated timeframe.

In conclusion, the judgment highlighted the importance of upholding principles of natural justice in tax assessment proceedings, emphasizing the necessity of providing a fair opportunity for personal hearing before imposing penalties or confirming proposals. The court's decision to set aside the assessment order and remit the matter for fresh assessment underscored the significance of procedural fairness in administrative actions.