2019 (3) TMI 845 - HC - VAT and Sales Tax

Assessment of notice - assessment under Section 16 of the HVAT Act - Whether VAT N-2 notice which is mandatory is required to be served on the assessee for assessment under Section 16 of the HVAT Act? - Whether the proceedings against the assessee would be rendered illegal in the absence of serving VAT N-2 notice on the assessee for the assessment under Section 16 of the HVAT Act? Held that - The case had been decided as inspection case under Section 29 of the Act after giving proper opportunity of hearing to the assessee and by issuing notice. Moreover, the limitation period for serving VAT N-2 notice under Section 16 of the Act had not yet expired and, therefore, even if the matter was remanded to the Assessing Authority for serving VAT N-2 notice on the assessee and then to pass fresh order, it would be a formality and futile exercise - The assessee cannot be absolved of its liability to pay penalty merely because it had retained the purchase invoices and bill books. Appeal dismissed.

Summary

Issues:
1. Whether VAT N-2 notice is mandatory for assessment under Section 16 of the HVAT Act?
2. Whether proceedings are illegal in the absence of serving VAT N-2 notice for assessment under Section 16 of the HVAT Act?

Analysis:
1. The appellant, engaged in the business of medicines, was inspected by the Department under Section 29 of the Act. The Assessing Authority levied tax and penalty under Section 16, stating the appellant did not register despite exceeding the taxable turnover limit. The appellant appealed, but both respondent No.2 and the Tribunal upheld the decision. The appellant argued that the proceedings were illegal due to the absence of a VAT N-2 notice and claimed bonafide belief for non-registration.

2. The High Court found no merit in the appeal. The inspection was conducted after giving the appellant a proper hearing and notice, satisfying the requirements. The limitation period for serving the VAT N-2 notice had not expired, making the remand for notice issuance a mere formality. The Tribunal rejected the bonafide belief argument, noting the appellant maintained records. The Tribunal remanded for recalculating the penalty based on the GTO determined from purchase invoices. The appellant's claim of existing limitation for the notice issuance was acknowledged, rendering the argument futile.

3. The Court dismissed the appeal as no illegality or perversity was found in the Tribunal's findings. The appellant failed to identify any grounds for interference, and no substantial legal question arose. Consequently, the appeal was dismissed for lacking merit.