2022 (11) TMI 145 - HC - VAT and Sales Tax

Validity of assessment order - petitioner submits that Ext.P3 order is passed by the third respondent without considering any of the objections raised by the petitioner such as opportunity for cross-examination of the consignors shown in the list, their details and address and an opportunity of hearing etc. - non-application of mind - HELD THAT - On a perusal of Ext.P3 order, it is seen that the 3rd respondent have given a voluminous list of unaccounted sales and unaccounted purchases. Further, the order does not reflect any detailed consideration of the issues raised by the petitioner such as the details of the respective consignors or the request for cross-examination made by the petitioner etc. Further, the request of the petitioner for opportunity of hearing was totally ignored by the 3rd respondent and Ext.P3 does not reflect any consideration on the said aspect. More over, the details of the list obtained from the KVATIS is out of reach of the petitioner since the list does not contain any address or details of the dealers for the petitioner to cross-verify the same. Though Ext.P3 order contains a voluminous list of the details of the dealer's name and value of the goods, the concluding portion of the order is very cryptic - the petitioner should be given an opportunity to present his case before the third respondent after affording an opportunity of hearing. The third respondent is directed to reconsider the entire issue on merits in accordance with law, after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment - Petition disposed off.

Summary

Issues:
Challenge to the legality of certain clauses of the Kerala State Goods and Services Act 2017, jurisdiction of tax authorities under the Kerala Value Added Tax Act 2003, violation of principles of natural justice in assessment proceedings, challenge to the 101st Constitutional Amendment of the Kerala State Goods and Services Tax Act 2017.

Analysis:

1. Challenge to Clauses of Kerala State Goods and Services Act 2017:
The petitioner sought a declaration that certain clauses of the Kerala State Goods and Services Act 2017 were illegal and ultra vires the Constitution of India. The clauses in question were argued to be beyond the scope and scheme of the Act. The court was requested to render these clauses void and unenforceable. The petitioner's contention was based on the interpretation of constitutional provisions and the specific language of the Act.

2. Jurisdiction of Tax Authorities under Kerala Value Added Tax Act 2003:
The petitioner challenged the jurisdiction of tax authorities under the Kerala Value Added Tax Act 2003, arguing that they were not empowered to levy, assess, and collect tax under the Act after certain amendments. The petitioner highlighted the changes brought about by the 101st Constitutional Amendment and the introduction of the Kerala State Goods and Services Act 2017. The issue revolved around the interpretation of constitutional provisions and the scope of authority granted to tax departments.

3. Violation of Principles of Natural Justice in Assessment Proceedings:
The petitioner contended that the assessment proceedings conducted by the third respondent were in violation of the principles of natural justice. The petitioner alleged that the order passed by the assessing authority did not consider objections raised, ignored requests for cross-examination, and failed to provide an opportunity for a personal hearing. The petitioner emphasized the importance of due process and fair treatment in administrative actions.

4. Challenge to 101st Constitutional Amendment of Kerala State Goods and Services Tax Act 2017:
The petitioner challenged the validity of the 101st Constitutional Amendment of the Kerala State Goods and Services Tax Act 2017. The petitioner argued that the provisions of the Kerala Value Added Tax Act 2003 could only be enforced for a limited period following the implementation of the nationwide goods and service tax or until repealed by a competent legislature. The court referred to a previous judgment on a similar issue and held that the petitioner was not entitled to relief based on this challenge.

In conclusion, the court set aside the order passed by the assessing authority and directed a reconsideration of the issue on merits, emphasizing the need for affording the petitioner an opportunity of hearing. The court highlighted the importance of considering all contentions raised by the petitioner before finalizing the proceedings, ensuring compliance with the principles of natural justice and procedural fairness.