2022 (11) TMI 262 - HC - VAT and Sales Tax

Principles of natural justice - validity of assessment order - impugned order observations and allegations about fake invoices and fake forms have been made against petitioner but show cause notice issued was without any of these allegations and without any details - opportunity not provided to petitioner to effectively deal with the allegations - HELD THAT - It is difficult to understand why Respondent No.3 could not have provided all the details alongwith the show cause notice. This is a serious lapse and we find in many matters the concerned officers do not provide all the details. Perhaps, they do not have proper training on adjudication matters or they are not even aware about the legal provisions or need to follow principles of natural justice. The impugned order alongwith show cause notice is hereby quashed and set aside. Respondent No.3 may issue a fresh show cause notice to petitioner containing every detail by which Respondent No.3 feels tax is sought to be evaded by not recording or recording in an incorrect manner or petitioner has claimed or deducted incorrectly. Petitioner shall file detailed reply within two weeks of receiving the show cause notice - Respondent No.3 may then pass final assessment order within eight weeks of receiving reply after giving personal hearing to petitioner, notice whereof shall be communicated atleast seven working days in advance. The assessment order shall contain all reasons for arriving at the findings there in and if the Assessing Officer does not agree with petitioner s contentions, detailed reasons as to why he disagrees shall also be given in the Assessment Order. Petition disposed off.

Summary

Issues:
Impugning an Assessment Order on various grounds, lack of details in the show cause notice, violation of principles of natural justice, quashing of the impugned order, issuance of a fresh show cause notice with detailed information, timeline for response and final assessment order, consideration of substantial cost, warning to respondents regarding future conduct.

Analysis:
The petitioner challenged an Assessment Order citing various grounds, including lack of specific details in the show cause notice, which prevented effective response to the allegations. The Court noted that the show cause notice was deficient and lacked essential information regarding the alleged discrepancies. It emphasized the importance of providing all necessary details in such notices for the recipient to adequately respond. The Court criticized the practice of providing details only during personal hearings, deeming it incorrect and mandated that all future show cause notices must contain comprehensive details for effective response.

The Court expressed dissatisfaction with the conduct of Respondent No.3 for commenting on issues not provided during the personal hearing, highlighting a serious lapse in procedure. It raised concerns about the lack of proper training or awareness among officers regarding legal provisions and principles of natural justice. Consequently, the Court quashed the impugned order and directed Respondent No.3 to issue a fresh show cause notice within two weeks, containing all necessary details for the petitioner to respond effectively.

Furthermore, the Court outlined a timeline for the response, final assessment order, and personal hearing, emphasizing the need for detailed reasons in the assessment order to justify any disagreements with the petitioner's contentions. While the Court considered awarding substantial costs to the petitioner, it refrained from doing so in this instance but warned the respondents about future consequences. It cautioned that the Court may direct adverse observations to be included in the officer's career record and urged the Board and Principal Commissioner to provide proper training to officers to avoid similar issues in the future.

In conclusion, the petition was disposed of, with a clear directive for the issuance of a detailed show cause notice, adherence to timelines, and a stern warning to respondents regarding future conduct, emphasizing the importance of procedural fairness and adherence to legal principles in such matters.