2019 (10) TMI 882 - HC - VAT and Sales Tax

Principles of natural justice - Grant of sanction b y the Additional Commissioner under Section 21 (2) of the Act permitting the assessing authority to initiate the re-assessment proceedings - no opportunity of hearing was afforded to the applicant by the Additional Commissioner - Service of order - no SCN issued - HELD THAT - T he ground being raised and pressed in the present case is fundamental both in the context of re-assessment proceedings as also in the context of violation of natural justice claimed by the assessee. It cannot be denied that the basis of the proceedings is the circular letter dated 18.3.2002. Also, it cannot be denied that the re-assessment order was passed on 30.3.2002 - Further, the reassessment order itself does not make any mention of the date on which the Additional Commissioner may have granted permission to the assessing authority to initiate the assessment proceedings outside the normal period of limitation or the date when it was served on the assessee or the date when re-assessment notice was first served on the assessee. The objections raised by the assessee are touching on jurisdictional issue. They go to the root of the proceedings. Therefore, it is desirable that the matter be re-examined by the first appellate authority specifically on the issue whether there exists an order, granting permission, passed by the Additional Commissioner with respect to the re-assessment proceedings initiated by the assessing authority. The matter is remitted to the first appeal authority to decide the matter afresh - revision allowed by way of remand.

Summary

Issues:
1. Validity of re-assessment order passed by the Tribunal.
2. Compliance with procedural requirements in re-assessment proceedings.

Analysis:

Issue 1: Validity of re-assessment order
The revisionist filed a revision against the Full Bench Tribunal's order affirming the re-assessment order for the assessment year 1995-96. The revisionist challenged the sanction granted by the Additional Commissioner under Section 21(2) of the Act, arguing that no opportunity of hearing was provided before initiating the re-assessment proceedings. The revisionist also contended that the re-assessment order was passed outside the normal period of limitation and lacked disclosure of the permission date. The Tribunal's decision was based on a circular letter suggesting a higher tax rate for electronic goods, leading to the re-assessment at a higher rate of 2.5%. The revisionist claimed a violation of natural justice due to rushed proceedings without proper hearings.

Issue 2: Compliance with procedural requirements
The revisionist argued that the assessing authority did not grant any hearing before passing the re-assessment order, which was completed within a short period after the circular letter's issuance. The revisionist emphasized the absence of any order granting permission for re-assessment outside the limitation period and the lack of details in the re-assessment order regarding such permission. The revisionist raised concerns about jurisdictional issues and procedural lapses, asserting a violation of natural justice throughout the proceedings. The revisionist's objections were considered fundamental, touching on the root of the re-assessment proceedings.

The High Court set aside the Full Bench Tribunal's order and remitted the matter to the first appellate authority for a fresh decision. The Court emphasized the need to re-examine the existence and procedural compliance of the permission order granted by the Additional Commissioner and the opportunity provided to the revisionist before passing the re-assessment order. The Court highlighted the importance of addressing jurisdictional issues and ensuring procedural fairness in re-assessment proceedings.