2021 (10) TMI 886 - HC - VAT and Sales Tax

Scope of SCN and the order passed - petitioner has a case that the notice issued, which is produced as Ext.P3, was under Section 25(1) of the KVAT Act. However, when the order was passed, it is seen to be passed under Section 25(A) of the KVAT Act - opportunity of hearing provided to the petitioner or not - HELD THAT - It is found from Ext.P5 that there has been undue haste in issuing the said order, which, in the circumstances of the case, is not warranted. In a case, where tax liability imposed on the petitioner is large as can be seen from Ext.P5, strict compliance of law is essential. Rule of law demands that a proper opportunity of hearing ought to be given before passing orders of assessment. Fair submission of the Learned Government Pleader, is placed on record, who submitted that the assessment order does not reflect such an opportunity as having been granted. The respondent is directed to pass fresh orders after affording a proper opportunity of hearing to the petitioner in accordance with law - petition allowed.

Summary

Issues:
Challenge to order under Section 25A of KVAT Act, lack of opportunity of hearing to petitioner.

Analysis:
The petitioner challenged Ext.P5 order passed under Section 25A of the KVAT Act, contending that the notice issued under Section 25(1) was misleading. The main grievance raised was the absence of an opportunity of hearing for the petitioner, as highlighted by the Learned Senior Counsel. The court noted that the order lacked proper hearing, which could prejudice the assessee, emphasizing the importance of providing a fair hearing in assessment proceedings. Referring to the case of M.S. Jewellery v. Assistant Commissioner, the court reiterated that even with an alternate remedy available, invoking Article 226 for violations of natural justice is justified. The court observed undue haste in issuing Ext.P5 order, especially considering the substantial tax liability imposed on the petitioner, emphasizing the necessity of strict compliance with the law and the rule of law demanding a proper opportunity of hearing before assessment orders are passed.

The court found that the assessment order did not reflect the grant of a proper opportunity of hearing, as acknowledged by the Learned Government Pleader. Consequently, the court allowed the writ petition, setting aside Ext.P5 order and directing the respondent to pass fresh orders after affording a proper opportunity of hearing to the petitioner in accordance with the law. The court also permitted the petitioner to raise the issue of whether the order should be passed under Section 25(1) or Section 25(A) of the KVAT Act before the respondent for consideration.