2023 (1) TMI 637 - HC - VAT and Sales Tax

Violation of principles of natural justice (audi alterem partem) - valid SCN not issued - service of notice at the address of the corporate office nor done - HELD THAT - Since the petitioner had given intimation of closure of business by submitting VAT Form 121, it is incumbent on the part of the 1st respondent authority to effect service of notice at the address of the corporate office and not by resorting to sending show cause notice either by registered post as claimed or by affixture at the last known address. Thus, the claim of the respondents in the counter-affidavit as well as the findings recorded in the impugned order of revision as to service of show cause notice on the petitioner, cannot be accepted as valid service and is liable to be rejected. Since the impugned order has been passed by the 1 st respondent, without causing valid service of show cause notice, the impugned order of revision as also the consequential order passed by the 2nd respondent authority giving effect to the order of the 1st respondent, suffers from violation of principles of natural justice and is liable to be interdicted - the impugned order dated 13.03.2017 passed by the 1st respondent and the consequential order dated 14.03.2017 passed by the 2 nd respondent are hereby set aside - the matter is remitted back to the 1st respondent authority for fresh consideration - Petition allowed by way of remand.

Issues:
1. Validity of assessment order under the Central Sales Tax Act, 1956 for the assessment year 2009-2010.
2. Allegations of illegal, arbitrary, and contrary assessment by the 1st and 2nd respondents.
3. Violation of principles of natural justice in passing the assessment order.
4. Service of show cause notice and adherence to procedural requirements.
5. Exemption on export sales of software and scrutiny of relevant documents.
6. Consideration of material on record and revision of assessment order.
7. Compliance with statutory provisions and procedural fairness.

Issue 1: Validity of Assessment Order
The writ petition challenges the assessment order dated 13.03.2017 under the Central Sales Tax Act, 1956 for the assessment year 2009-2010, alleging it to be illegal, arbitrary, and contrary to law. The petitioner contends that the order passed by the 1st respondent and the consequential order by the 2nd respondent are in violation of principles of natural justice.

Issue 2: Allegations of Illegal Assessment
The petitioner argues that the 1st respondent revised the assessment order passed by the 2nd respondent without proper service of show cause notice, leading to a lack of opportunity for the petitioner to present objections. The petitioner further asserts that the revision order withdrawing exemption on export sales of software was unfounded as the necessary documents and certificates were available.

Issue 3: Violation of Principles of Natural Justice
The petitioner emphasizes that the assessment order revision by the 1st respondent was done without considering the material available on record and without affording the petitioner an opportunity to be heard. This lack of procedural fairness constitutes a violation of principles of natural justice.

Issue 4: Service of Show Cause Notice
The counter-affidavit filed by the 1st respondent claims proper service of the show cause notice, including through e-mail and at the last known address of the petitioner. However, the court finds discrepancies in the claim as no supporting documents are provided to substantiate the e-mail communication, leading to a rejection of the respondent's assertion.

Issue 5: Exemption on Export Sales
The petitioner argues that the exemption granted by the 2nd respondent on export sales of software was withdrawn by the 1st respondent without due consideration of the documents and certificates provided, including the software export clearance certificate issued by the designated authority.

Issue 6: Compliance with Statutory Provisions
The court notes that the petitioner had duly informed the concerned authority of the closure of its business by submitting the necessary form, contradicting the respondent's claim of non-compliance. The failure to effect proper service of notice at the corporate office address is deemed a procedural flaw.

Conclusion
The court allows the writ petition, setting aside the impugned orders and remitting the matter back to the 1st respondent for fresh consideration. The impugned order dated 13.03.2017 is to be treated as a show cause notice, and the petitioner is granted time to file objections with documentary evidence. The 1st respondent is directed to provide a personal hearing to the petitioner and pass a reasoned order within a specified timeframe, ensuring compliance with principles of natural justice.

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