2020 (12) TMI 1167 - HC - VAT and Sales Tax

Violation of principles of Natural Justice - Validity of assessment order - assessment order assailed on the ground that the said orders have been passed at the fag end of the limitation period, that too during the period when the lockdown announced by the State Government was in force - HELD THAT - Admittedly, as can be seen from the G.O. Ms. No. 45, General Administration, dated 22.03.2020, issued by the Government of Telangana, wherein it is stated that consequent upon the Covid-19 being declared as a pandemic by the World Health Organization, the State Government, as an emergency measure to prevent and contain the spread of virus, is notifying lockdown in the entire State of Telangana with immediate effect, initially till 31 March 2020. By the said G.O issued, the Government had prescribed certain regulations and measures to be followed during the said period. The said period of lockdown was extended from time to time till the end of June, 2020. It is only thereafter, certain relaxations were given. It is not the case of the respondent authorities that the petitioners belong to the category of business entities/ undertakings whose activities were permitted by the above regulations. On the contrary, it is the case of the petitioners that the petitioners being commercial establishments, offices were required to keep their businesses closed upon issue of the above G.O by the Government of Telangana, with immediate effect. If the petitioners had not complied with the above regulation and had kept their offices functioning thereby violating the same, the petitioners were liable to be proceeded against under the provisions of Epidemics Diseases Act, 1897 and the Disaster Management Act, 2005 - Taking note of the regulation no.7 and also the consequences of violation thereof specified in regulation no.22, the petitioners cannot be expected to keep their business establishments, offices functioning after 22.03.2020. While on one hand the petitioners acted in consonance / compliance with the Government order issued to prevent and contain the spread of virus, the assessing authority on the other hand fastened the petitioners with the liability to tax by passing the impugned order of assessment, behind their back. The said action on the part of the respondent authorities cannot be upheld even though the authority may have compelling reasons to do so, having regard to the limitation to make assessment getting over - this court is of the view that the petitioners were prevented to represent themselves before their respective assessing authorities for getting the assessments completed from 22.03.2020 onwards. The impugned order of assessment passed by the respective assessment authorities would have to be considered as having been passed without affording adequate opportunity to the petitioners and as such is in violation of principles of natural justice - the matters are remitted back to the respective authority to pass orders afresh after issuing notice to the concerned petitioner - Petition allowed by way of remand.

Summary

Issues Involved:
Challenge to assessment orders passed during lockdown period under CST Act, 1956 for the assessment year 2015-16.

Analysis:
1. The writ petitions challenge assessment orders passed by Commercial Tax Authorities during the lockdown period. The common ground is that the orders were passed at the end of the limitation period during the lockdown, violating principles of natural justice.

2. Petitioners argue that due to lockdown, they were unable to operate their businesses as per government orders. The assessing authorities passed assessment orders raising tax demands without giving the petitioners a chance to submit objections or attend personal hearings.

3. Respondent authorities argue that the assessment orders were passed within the four-year limitation period under the CST Act. They claim the burden is on the assessee to prove any turnover not liable for tax.

4. The court considers whether the assessment orders were valid and in adherence with natural justice principles. It notes the lockdown regulations issued by the Government of Telangana, which required closure of all commercial establishments.

5. The court finds that the petitioners acted in compliance with the lockdown regulations to prevent the spread of the virus. However, the assessing authorities proceeded with assessments without affording adequate opportunity to the petitioners, violating principles of natural justice.

6. Consequently, the court sets aside the assessment orders and remits the matters back to the authorities for fresh orders after issuing notices to the petitioners. The petitioners are granted six weeks to file explanations/objections with supporting material, and the authorities must consider these submissions along with providing a personal hearing.

7. The court refrains from considering other grounds of challenge raised by the petitioners, allowing them to raise these before the assessing authorities. The miscellaneous petitions pending stand closed with no costs awarded.