2019 (3) TMI 442 - HC - VAT and Sales Tax

Principles of natural justice - the assessing authority was not satisfied with the petitioner s Ext.P2 reply, went ahead, and rendered the Ext.P3 assessment order - Held that - As the record bears out, the assessing authority remained unconvinced of the petitioner s Ext.P2 reply. So he rendered the Ext.P3 assessment order-but without providing an opportunity of hearing to the petitioner - True, the petitioner may not have the luxury of insisting on producing additional material only as a condition subsequent to the assessing authority s dissatisfaction about the reply. But the assessee must have an opportunity of hearing and it was asked for. The petitioner has been denied an effective opportunity of hearing - the Ext.P3 is set aside and matter remanded to the assessing authority for fresh adjudication.

Summary

Issues:
Violation of principles of natural justice by denying opportunity of hearing to the petitioner.

Analysis:
The petitioner responded to a notice under Section 25(1) of the Kerala Value Added Tax Act seeking an opportunity of being heard and to file additional documents if needed. The assessing authority, unsatisfied with the petitioner's reply, proceeded to issue an assessment order without providing the requested opportunity. The petitioner challenged this action through a Writ Petition.

The petitioner's counsel argued that the authority's failure to provide the requested opportunity of hearing amounted to a violation of natural justice principles. Reference was made to a Division Bench judgment to support this contention. On the other hand, the Government Pleader argued that since the petitioner had already been given one opportunity of hearing, there was no violation of natural justice.

The Court noted that the petitioner had indeed sought an opportunity of hearing in the reply and wanted to file additional documents only if the authority remained unsatisfied with the response. Despite this, the assessing authority proceeded with the assessment without granting a hearing to the petitioner. Citing relevant case law, the Court emphasized the importance of providing an opportunity of hearing when requested by the assessee.

Consequently, the Court held that the petitioner had been denied an effective opportunity of hearing and set aside the assessment order. The matter was remanded to the assessing authority for fresh adjudication, with a specific direction to hear the petitioner before passing any new order. The petitioner was also allowed to produce additional material if available and was instructed to appear before the assessing authority on a specified date to avoid further delays.