2021 (9) TMI 1002 - HC - VAT and Sales Tax

Validity of reassessment order - benefit of input tax credit - consideration of H form submitted by the petitioner for exemption of turnover tax on the export effected - prohibition on initiation of fresh recovery proceedings in respect of the re-assessment order - HELD THAT - Perusal of the impugned order at Annexure-A will clearly indicate that except for stating that the notice alleged to have been sent by the respondent No.2 to the petitioner was returned unserved with the endorsement no such premises found , the respondent No.2 did not intimate or notify the petitioner about the proceedings nor was the petitioner heard before passing the impugned order, which clearly shows that no opportunity, much less reasonable or sufficient opportunity was provided to the petitioner before passing the impugned order which is violative of principles of natural justice and deserves to be quashed. On the ground of violation of principles of natural justice alone, the impugned order passed by the respondent No.2 as well as subsequent endorsement at Annexure-B dated 1.4.2021 deserve to be quashed - Petition allowed by way of remand.

Issues:
1. Validity of reassessment order for the assessment year 2009-10 under CST Act and KVAT Act.
2. Extension of input tax benefit and consideration of "H" form and C forms for exemption.
3. Prohibition on pursuing remedy in the Judicial Magistrate Court.
4. Violation of principles of natural justice and need for quashing the impugned orders.

Analysis:

Issue 1:
The petitioner sought to quash the reassessment order for the assessment year 2009-10 under the CST Act and KVAT Act. The petitioner argued that the impugned order lacked natural justice principles as the notice was not served, and the petitioner was not heard before passing the order. The court found merit in the petitioner's contention, emphasizing the violation of natural justice principles. Consequently, the court quashed the impugned orders and remitted the matter back to the respondent for reconsideration while providing sufficient opportunity to the petitioner.

Issue 2:
The petitioner requested the extension of input tax benefit and consideration of "H" form and C forms for exemption. The court noted the petitioner's unawareness of the proceedings until receiving communication from the Magistrate regarding recovery proceedings. The court rejected the respondent's argument on delay and latches, given the violation of natural justice and lack of awareness on the petitioner's part. As a result, the court allowed the petition, quashed the impugned orders, and directed reconsideration by the respondent with proper opportunity for the petitioner.

Issue 3:
The petitioner sought a writ of Prohibition against pursuing the remedy in the Judicial Magistrate Court. The court did not specifically address this issue in the judgment but focused on the violation of natural justice and the quashing of impugned orders. As a result, the court's decision to remit the matter back to the respondent for reconsideration indirectly addresses the concern of prohibiting further proceedings in the Magistrate Court.

Issue 4:
The central issue revolved around the violation of natural justice principles in passing the impugned orders. The court concurred with the petitioner's argument, highlighting the lack of notice and opportunity provided before passing the order. The court deemed the impugned orders violative of natural justice and quashed them, emphasizing the need for reconsideration by the respondent with proper adherence to legal procedures.

In conclusion, the High Court of Karnataka allowed the petition, quashed the reassessment order, and directed reconsideration by the respondent while ensuring the petitioner's right to natural justice and a fair opportunity in the proceedings.

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