2020 (7) TMI 229 - HC - VAT and Sales Tax

Revision of assessment order - certain C-Declaration Forms submitted by the petitioner were cancelled and that the petitioner had made corrections in the said declaration forms - HELD THAT - Sri J.Anil Kumar, Special Counsel for Commercial Taxes appearing for respondents is not in a position to say why in spite of the letters dt.31.01.2020 and dt.12.02.2020 addressed by the petitioner to the 2nd respondent for return of the original C-Declaration Forms, the 2nd respondent did not return them to the petitioner for rectification/clarification by the petitioner s vendors, who had issued them to him - Unless the petitioner is returned the original C-Declaration Forms by the 2nd respondent, petitioner would not be in a position to explain whether the said C-Declaration Forms were defective in any manner and he cannot get them rectified by his vendors. Denial of such opportunity to the petitioner has caused grave prejudice to the petitioner. The 2nd respondent is directed to return the original C-Declaration Forms to the petitioner within two weeks from the date of receipt of a copy of this order - petition allowed.

Summary

Issues:
1. Revision of assessment order under the CST Act, 1956 based on cancellation of C-Declaration Forms.
2. Denial of personal hearing during a lockdown period due to the COVID-19 pandemic.
3. Failure to return original C-Declaration Forms for rectification by the petitioner's vendors.

Analysis:
1. The petitioner, engaged in manufacturing industrial paints and powder coatings, was assessed under the CST Act, 1956 by the 1st respondent. The 2nd respondent initiated a revision process under the Telangana VAT Act, 2005, citing canceled C-Declaration Forms and corrections made by the petitioner. The petitioner requested the return of original C-Declaration Forms for rectification from vendors, emphasizing the need for a personal hearing.

2. The 2nd respondent scheduled a personal hearing for the petitioner, but due to the COVID-19 lockdown, the petitioner could not attend. Despite the circumstances, the 2nd respondent proceeded to pass the revisional order, leading to a demand of ?79,09,708. The petitioner argued that denial of personal hearing during the lockdown was unjust and prejudiced their case.

3. The petitioner's counsel highlighted the necessity of returning the original C-Declaration Forms for clarification from vendors to address any defects. The Special Counsel for Commercial Taxes acknowledged the lockdown situation and agreed that the matter should be reconsidered by the 2nd respondent. The court allowed the writ petition, setting aside the revision order and directing the return of original forms to the petitioner for response within four weeks, followed by a personal hearing and a reasoned order by the 2nd respondent.

This judgment underscores the importance of procedural fairness, especially in extraordinary circumstances like a lockdown, ensuring that parties have the opportunity to present their case effectively and address any discrepancies in the assessment process.