2023 (3) TMI 883 - HC - VAT and Sales Tax

Violation of principles of natural justice - Validity of assessment orders - case of petitioner is that the respondent(s) has levied the tax on the respective enhanced turnover without granting an opportunity of hearing to the petitioner - HELD THAT - Admittedly, the proposals sent by the respondents through their notices dated 02.05.2017, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020, they have proposed to levy tax only at the rate of 5% on the respective taxable turnover of the petitioner. But as seen from the impugned Assessment Orders, dated 11.12.2019, 09.12.2019 and 11.12.2019, the respondent(s) has levied tax on the respective enhanced turnover, which is in excess of the respective taxable turnover mentioned in the proposals dated 02.05.2019, 05.02.2019 and 19.11.2019, 22.11.2019 and 04.02.2020. As seen from the impugned Assessment Orders, a higher rate of tax at 14.5% on the respective turnover has been made without granting an opportunity of hearing to the petitioner. Excepting for the final notice dated 22.11.2019 issued by the respondent(s) to the petitioner which discloses that the petitioner will have to furnish correct details of the purchases made by the petitioner and also discloses that in case, the purchases were made by the petitioner from a registered dealer, the levy of tax will be at the rate of 5% and in case the purchases were made from an unregistered dealer, the levy of tax will be at the rate of 14.5%, the actual figures based on the best judgment assessment of the respondent which is proposed to be made on the petitioner has not been disclosed - The learned counsel for the petitioner would categorically contend that no personal hearing was afforded to the petitioner in the impugned Assessment Orders. Since in the impugned Assessment Orders, it is not seen as to whether personal hearing was afforded to the petitioner or not, the statement of the petitioner that no personal hearing was afforded to them in the impugned assessment proceedings has to be believed. In the instant case, admittedly as seen from the impugned Assessment Orders, the proposal notices sent to the petitioner on different dates were for different amounts, but in the impugned Assessment Orders, the tax liability of the petitioner is much more than the figure mentioned in the proposals sent to the petitioner - this Court is of the considered view that principles of natural justice has been violated by the respondent(s) before passing of the impugned Assessment order and by non application of mind the impugned Assessment Orders have been passed, since the proposal notices sent by the respondent(s) discloses a different figure than which is determined in the impugned Assessment Orders and the figure determined in the impugned Assessment Orders are much higher than the figure disclosed in the proposal notices sent by the respondent(s). The impugned Assessment Orders have to be quashed and the matter will have to be remanded back to the respondent(s) for fresh consideration on merits and in accordance with law - Petition disposed off by way of remand.

Summary

Issues:
Challenging Assessment Orders on grounds of natural justice violation.

Analysis:
The petitioner challenged the Assessment Orders for violating natural justice principles. They argued that their objections were not considered, and the Orders were ante-dated to reject objections. The tax was enhanced without a hearing, and a higher rate was levied without notice. The respondent's actions were compared to legal precedents emphasizing fairness in assessment procedures.

The petitioner cited a Division Bench judgment and a Circular emphasizing that assessment should not differ from proposals. They also referenced Supreme Court decisions on the importance of aligning Assessment Orders with show cause notices. Another Division Bench judgment was cited to support their argument.

The respondent claimed to have provided a fair opportunity for a hearing and justified the tax rates based on prior communication. They argued that the petitioner was aware of the consequences for not providing purchase details. The respondent's advocate stated that personal hearings were conducted, and the judgments cited by the petitioner were not applicable due to sufficient opportunities granted.

The Court noted discrepancies between proposed tax rates and actual levies in the Assessment Orders. It found that the petitioner was not adequately informed and had not been granted a proper hearing. The Court emphasized the importance of disclosing proposed tax figures for proper objection. It concluded that natural justice principles were violated, and the Assessment Orders were passed without proper consideration.

The Court quashed the Assessment Orders and remanded the matter for fresh consideration, emphasizing adherence to natural justice principles. The respondents were directed to issue final orders within twelve weeks, ensuring the petitioner's right to a personal hearing. The writ petition was disposed of without costs, and connected petitions were closed.