2019 (8) TMI 756 - HC - VAT and Sales Tax

Validity of assessment order - Section 25(1) of KVAT Act - principles of natural justice - assessment years 2011-2012; 2012-2013, 2013- 2014, 2014-2015 and 2015-2016 - HELD THAT - This Court is of the view that any of the hearings taken independently or together do not amount to giving opportunity of hearing to petitioner by R1. The first notice was issued in the month of January and the order was made on 25.03.2019. The events noted in record between 16.01.2019 and 01.03.2019 do not satisfy that opportunity of personal hearing was given to petitioner. Likewise admittedly there is no hearing after 01.03.2019 to make good the deficiency in affording opportunity of hearing prior to 01.03.2019. The argument that objections filed on 01.03.2019 do not warrant hearing, is subjective and R1 could not have assumed that hearing would be nothing but an empty formality. On the ground that without giving petitioner opportunity of hearing on the objections filed in this behalf, Ext.P1 order is set aside and the matter restored to file of respondent No.1. The petitioner is directed to appear before respondent No.1 on 21.08.2019. The respondent on 21.08.2019 or on any other date, to which the matter stands posted completes the assessment. The assessment is completed on or before 05.09.2019 - Matters restored to the file of respondent No.1 for disposal.

Summary

Issues:
Challenge to orders under Section 25(1) of KVAT Act for multiple assessment years, violation of principles of natural justice.

Analysis:
The petitioner, a medical institute, challenged orders made under Section 25(1) of the KVAT Act for assessment years 2011-2016, alleging illegality and violation of natural justice principles. The lead case, W.P(C) No. 11838 of 2019, questioned the assessment order for 2011-2012, with other writ petitions filed for subsequent years. The petitioner contended that re-examination of claimed Gp percentage was unwarranted, as they were compliant with statutory obligations. The respondent issued notices proposing reassessment, leading to objections from the petitioner. The court directed the respondent to produce original records for scrutiny, revealing a lack of clear opportunity for personal hearing to the petitioner.

The chronology of events showed notices, replies, and objections being exchanged between the parties. Despite objections filed on 01.03.2019, no clear date for a hearing was provided by respondent No.1 before passing the impugned order on 25.03.2019. The court found that the events did not amount to affording a proper opportunity of hearing to the petitioner. The complexity of re-assessed issues and substantial financial implications necessitated a fair hearing, which was lacking in this case.

Due to the deficiency in affording a proper opportunity of hearing, the court set aside the impugned order and directed the matter to be restored to the file of respondent No.1. The petitioner was instructed to appear before respondent No.1 for assessment completion by a specified date. Similar orders for other assessment years were also set aside and restored for proper disposal. The court emphasized the importance of providing a clear opportunity for a hearing before passing such orders under Section 25(1) of the Act.

In conclusion, the writ petitions were disposed of accordingly, highlighting the significance of adhering to principles of natural justice and ensuring a fair process in assessment proceedings under the KVAT Act.