2019 (7) TMI 111 - HC - VAT and Sales Tax

Principles of Natural Justice - validity of reassessment order - sufficient opportunity of being heard not provided to the petitioner - HELD THAT - It is settled law that an order passed by the quasi judicial authority sans providing reasonable opportunity of being heard is void ab initio and the same cannot be approved by this Court contrary to the fundamental rule of natural justice. The action of the respondent No.1 in issuing multiple proposition notices proposing different tax liabilities and passing the impugned re-assessment order in haste cannot be appreciated - Issuing of revised proposition notices would indicate the perfunctory nature of action of the respondent No.1. With the fond hope that such cavalier action shall not be repeated by the respondent No.1 in future, this Court deems it appropriate to set aside the re- assessment order and the consequential demand notice at Annexure-A, impugned herein, with liberty to the petitioner to file reply/objections to the last proposition notice dated 16.04.2019 - petition disposed off.

Summary

Issues:
1. Reassessment order passed without providing sufficient opportunity of being heard.
2. Issuance of multiple revised proposition notices proposing different tax liabilities.
3. Validity of the re-assessment order based on the principles of natural justice.

Analysis:
1. The petitioner challenged the re-assessment order passed by respondent No.1 under the Karnataka Value Added Tax Act, 2003, alleging a lack of adequate opportunity to be heard. The respondent issued various proposition notices, leading to a final tax liability proposal of &8377; 1,00,43,88,891/-. The petitioner contended that the respondent did not allow sufficient time to respond to the revised notices, leading to the impugned re-assessment order dated 20.04.2019. The petitioner argued that the order was arbitrary and should be set aside due to the absence of a fair hearing.

2. The Court noted that the respondent's actions in issuing multiple revised proposition notices proposing varying tax liabilities and hastily passing the re-assessment order were not in line with established legal principles. The Court emphasized that a quasi-judicial authority must provide a reasonable opportunity to be heard before making decisions. The Court criticized the perfunctory nature of the respondent's actions, highlighting the need for a thoughtful consideration of the tax liability before issuing notices. The Court found fault with the respondent's approach and emphasized the importance of due process in such matters.

3. In the final judgment, the Court declared the re-assessment order and consequential demand notice as void due to the lack of a fair hearing. The Court directed the respondent to set aside the impugned order and notice, allowing the petitioner to file objections within two weeks of receiving a certified copy of the order. The Court stressed that future proceedings should adhere to legal requirements and be conducted in an expedited manner. The judgment concluded by disposing of the writ petition with these directions, ensuring the petitioner's right to a fair opportunity to respond to the tax liability proposal.