2019 (4) TMI 423 - HC - VAT and Sales Tax

Principles of natural justice - validity of assessment order - grievance of the petitioner before this Court is that the said order was passed without issuing a notice of proposal and affording an opportunity to the petitioner to defend the claim of the Revenue - Held that - Perusal of the impugned order would show that the same came to be passed pursuant to an inspection conducted by the Enforcement Officials and without issuing any further notice of proposal to the petitioner. Therefore, it is evident that the impugned order passed in violation of principles of natural justice cannot be sustained, even though, the same came to be passed based on the report submitted by the Enforcement Officials. Therefore, this Court is inclined to interfere with the impugned order by setting aside the same, however, by remitting the matter back to the Assessing Officer to redo the assessment after issuing the notice of proposal and hearing the petitioner. Petition allowed by way of remand.

Issues: Violation of principles of natural justice in assessment order

In this case, the petitioner challenged an assessment order dated 27.12.2018 for the assessment year 2016-2017, alleging that it was passed without issuing a notice of proposal and providing an opportunity to defend the claim of the Revenue. The impugned order was based on an inspection by Enforcement Officials without further notice to the petitioner. The respondent, represented by the Additional Government Pleader, did not dispute the absence of a notice of proposal. The High Court found that the impugned order violated principles of natural justice and could not be sustained. Consequently, the Court set aside the order and remitted the matter back to the Assessing Officer for reassessment. The Assessing Officer was directed to issue a notice of proposal, hear the petitioner, consider objections independently, and pass a fresh order within six weeks from the date of the Court's order. No costs were awarded, and the connected miscellaneous petition was closed.

The primary issue in this case was the lack of adherence to principles of natural justice in the assessment order issued by the respondent for the assessment year 2016-2017. The petitioner contended that the order was passed without providing a notice of proposal and an opportunity to defend the Revenue's claim. The High Court noted that the impugned order, resulting from an inspection by Enforcement Officials without additional notice, indeed violated principles of natural justice. The Court emphasized the importance of procedural fairness in such matters.

The Court's analysis focused on the procedural irregularity in the assessment process, specifically the absence of a notice of proposal before the issuance of the impugned order. Despite the Enforcement Officials' report forming the basis of the order, the Court held that the failure to provide an opportunity for the petitioner to respond was a significant violation of natural justice. The Court highlighted the necessity of affording parties a fair hearing and the right to present their case before any adverse decision is made against them.

The judgment highlighted the fundamental principle that administrative actions, including assessment orders, must comply with the principles of natural justice. The Court, after considering both parties' arguments, concluded that the impugned order could not stand due to the absence of a notice of proposal and the denial of an opportunity for the petitioner to present their case. As a result, the Court set aside the order and directed the Assessing Officer to conduct a fresh assessment after issuing a notice of proposal, hearing the petitioner, considering objections independently, and ensuring a fair and lawful decision-making process within a specified timeframe.

The Court's decision to allow the writ petition and set aside the impugned order underscored the significance of procedural fairness and adherence to natural justice principles in administrative actions. By remitting the matter back to the Assessing Officer for a fresh assessment with proper procedural safeguards, the Court reaffirmed the importance of due process and the right to be heard in matters affecting individuals' rights and interests. The Court's directive for a timely reassessment with full consideration of the petitioner's objections aimed to rectify the initial procedural flaw and uphold the principles of fairness and justice in administrative proceedings.

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