2024 (3) TMI 224 - HC - VAT and Sales Tax

Validity of orders of assessments under the Puducherry Value Added Tax Act, 2007 - challenge on the premise that the same has been completed without even issuing a show cause notice to the petitioner contrary to Section 24 of the Act which provides that no assessment shall be made without the grant of reasonable opportunity and thus a nullity - violation of principles of natural justice - HELD THAT - This Court is conscious of the fact that writ petition under Article 226 of the Constitution of India would not be entertained normally if statutory remedy is available. However, existence of alternate remedy is not an embargo or an absolute bar to exercise power under Article 226 of the Constitution of India but a self-imposed restriction and the following circumstances viz., violation of principles of natural justice or lack of jurisdiction or error apparent on the face of the record are some of the exceptions carved out to the rule of alternate remedy for exercise of discretion under Article 226 of the Constitution of India. The impugned orders are made in violation of principles of natural justice and thus falls within the exceptions carved out to the rule of alternate remedy for entertaining writ petition under Article 226 of the Constitution of India. While this Court is conscious of the fact that though law of limitation does not strictly apply to the writ petitioner, nevertheless Courts would be loathe in permitting writ petitions after inordinate and unexplained delay or laches. Though the same by itself may not be an absolute impediment to exercise judicial discretion and rendering of substantial Justice. From a reading of the extract from the affidavit filed by the petitioner this Court is satisfied with the explanation for the delay in approaching this Court. Importantly, the orders having been made in complete disregard to the mandate contained in Section 24 of the Act, the impugned orders of assessment are a nullity and thus liable to be set aside. The petitioner would treat the impugned orders of assessment as show cause notice and submit its objections within a period of 4 weeks from the date of receipt of a copy of this order and the Respondents shall proceed to complete the assessment within a further period of 12 weeks from the date of receipt of objections. In the event the petitioner fails to submit its objections within the period stipulated herein i.e., 4 weeks from the date of receipt of a copy of this order, the orders of assessment will stand restored and it shall be open to the Respondents to proceed in accordance with law. The writ petition disposed off.

Summary

Issues involved:
Challenging orders of assessments under the Puducherry Value Added Tax Act, 2007 for the assessment years 2015-16 and 2016-17 on the basis of lack of show cause notice issuance.

Comprehensive Details:

Issue 1: Lack of show cause notice issuance
The petitioner, a manufacturer and dealer of various food items, challenged assessment orders under the PVAT Act for the years 2015-16 and 2016-17, citing lack of a show cause notice. The assessment revealed alleged discrepancies in input tax credit and issues regarding the rate of tax on mayonnaise sales. Despite discrepancies noticed during inspection, the impugned orders were passed without issuing a show cause notice, violating Section 24 of the Act which mandates a reasonable opportunity for the dealer to respond.

Issue 2: Jurisdiction of the Court
While acknowledging that statutory remedies are generally preferred over writ petitions, exceptions exist for cases involving violations of natural justice. The impugned orders were deemed to violate principles of natural justice, justifying the court's intervention under Article 226 of the Constitution of India.

Issue 3: Delay in challenging assessment
The Respondents argued a delay in challenging the assessment, but the petitioner explained the delay due to efforts made by their auditor, who unfortunately passed away. The petitioner sought rectification of the orders, which was delayed due to the pandemic and lack of response from the Respondents. The court accepted the reasons for delay and set aside the impugned orders, directing the petitioner to submit objections within 4 weeks for a fresh assessment within 12 weeks.

In conclusion, the writ petitions were disposed of with no costs, emphasizing the need for adherence to procedural fairness and providing an opportunity for the petitioner to respond to the assessment issues.