2021 (7) TMI 779 - HC - VAT and Sales Tax

Rectification of mistake - mistake apparent on the face of record or not - petitioner was not afforded an opportunity of personal hearing while passing of the endorsement - violation of principles of natural justice - HELD THAT - No doubt petitioner has addressed an Email to the Assessing Officer on 25.04.2021 stating that additional statements were being filed along with certain attachments. Additional submission is also enclosed at Annexure-'C'. A perusal of which would reveal that the petitioner had sought to resile from the earlier declaration in VAT Form 240 that has been made pursuant to inadvertent error that has been recorded in the sales record that was reflected in VAT Form 100 filed in the month of November, 2016 where the sale return has been inadvertently mentioned as ₹ 66,80,58,118/- instead of the actual sale return of ₹ 6,60,85,118/-. A perusal of the re-assessment order would indicate that the Assessing Officer has considered substantially the contention of the petitioner regarding discrepancy in VAT Form 240 which is on the basis of an inadvertent error in VAT Form 100 for the month of November, 2016. The Assessing Officer having recorded a finding, the correctness or otherwise including the aspect of filing a revised VAT Form 240 is a matter open to be considered in the substantive remedy and it cannot be stated that non-taking of notice of Email on 25.04.2021 as amounting to violation of principles of natural justice requires re-assessment order to be set aside on that sole ground, when there has been substantial adherence to the principles of natural justice - where error is on the basis of wrong declaration by the petitioner admittedly that has crept in declaration in VAT Form 100 form with respect to sale declaration of November, 2016, the said aspect is kept open to be considered in a substantive remedy of appeal, and no ground is made out for interference in these proceedings. The petitioner shall appear before the respondent to avail of the opportunity of personal hearing and to facilitate consideration of his application for rectification afresh on 09.07.2021 - Petition allowed in part.

Summary

Issues:
1. Opportunity of personal hearing not afforded during the passing of the endorsement.
2. Allegation of non-consideration of additional submissions and attachments communicated via Email.
3. Discrepancy in VAT Form 240 due to clerical error and subsequent re-assessment order.
4. Violation of principles of natural justice in the assessment process.

Opportunity of Personal Hearing:
The petitioner filed an application for rectification under Section 69 of the Karnataka Value Added Tax Act, claiming a mistake in the assessment order due to not being given a personal hearing. The court found that the opportunity of personal hearing was indeed not granted, leading to the setting aside of the endorsement dated 31.05.2021. The respondent was directed to reconsider the rectification application filed by the petitioner, keeping all contentions open.

Non-Consideration of Additional Submissions:
The petitioner alleged that the Assessing Officer did not consider the additional submissions and attachments sent via Email regarding errors and omissions in the sales return data. The court noted that the Assessing Officer finalized the re-assessment proceedings and passed the order before fully applying their mind to the Email sent by the petitioner. However, as substantial consideration was given to the discrepancy in the declaration made by the petitioner in VAT Form 240 due to a clerical error, the court held that the matter could be addressed in a substantive remedy like an appeal. The court found no grounds for interference in the proceedings based solely on the non-consideration of the Email.

Discrepancy in VAT Form 240 and Re-assessment Order:
The petitioner pointed out a discrepancy in VAT Form 240 due to a clerical error, which was duly considered by the Assessing Officer in the re-assessment order. The court acknowledged that the Assessing Officer had substantially addressed the petitioner's contention regarding the error in VAT Form 100 for the month of November 2016. The court held that the matter could be further examined in a substantive remedy like an appeal, and there was no sufficient reason to set aside the re-assessment order solely based on the non-consideration of the Email.

Violation of Principles of Natural Justice:
Regarding the alleged violation of principles of natural justice, the court observed that the Assessing Officer had substantially adhered to these principles despite not fully considering the Email sent by the petitioner. The court concluded that the error in the declaration by the petitioner could be addressed in a substantive remedy like an appeal, and there was no need to set aside the re-assessment order solely on the grounds of the Email not being fully taken into account.

Conclusion:
The petition was partly allowed, directing the petitioner to appear before the respondent for a personal hearing to reconsider the rectification application. The respondent was instructed to consider the additional objections raised by the petitioner via Email as per the law. The court clarified that its observations were specific to the current petition, allowing authorities to reach independent conclusions in accordance with the law.