2019 (2) TMI 1088 - HC - VAT and Sales Tax

Validity of assessment order - levy of tax on the maintenance and repair work on the buildings of P.W.D - levy of tax on payment of wages to labourers which is pure labour work - imposition of penalty - AO has not given an opportunity of personal hearing to the petitioner before imposing such penalty - principles of natural justice. Held that - The petitioner disputes his liability to pay the tax by contending that such levy on the maintenance work and payment of wages to the labourers is improper. 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 - 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 - 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:
Challenge against order of assessment for the assessment year 2012-13. Dispute regarding tax on maintenance and repair work on buildings of P.W.D and payment of wages to laborers. Objection to penalty imposition without personal hearing opportunity.

Analysis:
The petitioner contested the assessment order for the assessment year 2012-13, objecting to the tax levied on maintenance and repair work on P.W.D buildings and wages paid to laborers. Additionally, the petitioner raised concerns about the penalty imposition without a personal hearing opportunity. The Additional Government Pleader argued that the petitioner did not respond to the notice of proposal or utilize the personal hearing opportunity provided. The court heard both sides and noted the petitioner's refusal to pay the tax, citing improper levy on maintenance work and laborer wages. However, the petitioner failed to file a written reply to the notice of proposal, although he personally met the Assessing Officer to explain the situation.

The court highlighted that the Assessing Officer imposed a penalty without specifying a date for personal hearing, as required by Circular No.7 of 2014. Referring to a previous case, the court emphasized the necessity of granting a personal hearing opportunity, which was not provided in this instance. Consequently, the court set aside the assessment order due to a violation of natural justice, without delving into the merits of the contentions raised by the parties. The matter was remitted back to the respondent for fresh assessment orders after ensuring a proper opportunity for personal hearing.

Considering the Assessing Officer's failure to provide a personal hearing, the court decided to remit the matter back for reassessment, with the condition that the petitioner must pay 15% of the tax liability. The writ petition was allowed, the impugned order was set aside, and the case was remitted back to the Assessing Officer with specific terms and conditions. These conditions included payment of 15% of the tax liability, indication of a date for personal hearing, and subsequent issuance of a fresh assessment order within a specified timeframe. No costs were awarded, and the connected miscellaneous petitions were closed.