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2024 (8) TMI 776 - HC - VAT and Sales TaxValidity of assessment order - impugned order is passed without giving opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT - It is not in dispute that the impugned order is passed without giving opportunity of hearing to the petitioner and without considering the directions issued by the coordinate Bench of this Court in MALANI CONSTRUCTION COMPANY VERSUS STATE OF GUJARAT 2019 (9) TMI 171 - GUJARAT HIGH COURT in case of the petitioner where it was held that ' The respondent No. 2 shall once again hear the writ applicant and take into consideration all the relevant materials earlier adduced by the writ applicant and also the materials that may be once again adduced at the time of rehearing of the matter.' On perusal of the impugned order also, it appears that no findings are recorded by the respondent No. 2 in the impugned order for applying the provision of Section 2 (30) (c) of the Act though learned Assistant Government Pleader has tried to explain the same during the course of hearing as well as relying upon the averments made in the affidavit-in-reply. The show-cause notice for penalty also appears to be a cyclostyled show-cause notice. Therefore, without entering into the merits of the matter, the impugned order dated 14th November, 2019 and the notice for penalty dated 14th November, 2019 are hereby quashed and set aside and the matter is remanded back to respondent No. 2, with a direction to give opportunity of hearing to the petitioner and pass fresh de novo order in accordance with law after complying with the directions issued by this Court in MALANI CONSTRUCTION COMPANY VERSUS STATE OF GUJARAT by applying mind to the method of accounting and also to take into consideration the decision of the Apex Court in the case of GANNON DUNKERLEY CO. VERSUS STATE OF RAJASTHAN LARSEN TOUBRO LTD. UNION OF INDIA 1992 (11) TMI 254 - SUPREME COURT by giving detail reasons for coming to the conclusion if the respondent No. 2 is of the view that the method adopted was in accordance with Section 2 (30) (c) of the VAT Act. Petition disposed off by way of remand.
Issues Involved:
1. Validity of the assessment order dated 14.11.2009. 2. Validity of the notice for amount assessed dated 14.11.2009. 3. Adherence to the principles of natural justice. 4. Compliance with the directions issued by the Coordinate Bench of the High Court in the previous judgment. 5. Correct application of Section 2(30)(c) of the Gujarat Value Added Tax Act, 2003. 6. Justification for the imposition of penalty under Sections 34(7) and 34(12) of the Act. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order dated 14.11.2009: The petitioner challenged the assessment order on the grounds that it was passed without proper consideration of the method of accounting consistently followed by the petitioner, which was based on the cost plus gross profit method. The assessment order was found to be arbitrary and passed without affording the petitioner an opportunity to explain their method of arriving at the taxable turnover of sales. 2. Validity of the Notice for Amount Assessed dated 14.11.2009: The notice for the amount assessed was also challenged on similar grounds as the assessment order. It was argued that the notice lacked specific reasons for the imposition of a huge penalty and was issued in a cyclostyle format, indicating multiple instances without specifying any particular reason applicable to the petitioner's case. 3. Adherence to the Principles of Natural Justice: The petitioner contended that the assessment order was passed in violation of the principles of natural justice, as no proper opportunity of hearing was provided. The respondent authority failed to indicate specific reasons for rejecting the petitioner's method of accounting and did not provide an opportunity to explain the deductions claimed. 4. Compliance with the Directions Issued by the Coordinate Bench of the High Court in the Previous Judgment: The Coordinate Bench had previously remanded the matter back to the respondent for fresh assessment, directing the respondent to reconsider the method of accounting and the decision of the Supreme Court in the case of Gannon Dunkerly & Co. The petitioner argued that these directions were not followed, and the respondent once again passed the assessment order without proper consideration of the petitioner's consistent method of accounting. 5. Correct Application of Section 2(30)(c) of the Gujarat Value Added Tax Act, 2003: The respondent authority applied Section 2(30)(c) of the Act to determine the taxable turnover of sales, rejecting the petitioner's method of accounting. The petitioner argued that the respondent did not provide reasons for rejecting the deductions claimed and did not consider the labour and incidental expenses required to be deducted under the Act. 6. Justification for the Imposition of Penalty under Sections 34(7) and 34(12) of the Act: The petitioner challenged the imposition of a huge penalty, arguing that the notice for penalty was issued without indicating specific reasons for the penalty. The respondent authority issued a cyclostyle notice, indicating multiple instances without specifying any particular infraction applicable to the petitioner's case. Judgment: The High Court quashed and set aside the assessment order dated 14.11.2009 and the notice for penalty dated 14.11.2009. The matter was remanded back to the respondent for fresh consideration, directing the respondent to provide an opportunity of hearing to the petitioner and to follow the directions issued by the Coordinate Bench in the previous judgment. The respondent was instructed to apply their mind to the method of accounting and to take into consideration the decision of the Supreme Court in the case of Gannon Dunkerly & Co., providing detailed reasons for their conclusions. The entire exercise was to be completed within 12 weeks from the date of receipt of the order. The court did not go into the merits of the matter and directed the respondent to pass a de novo order after giving the petitioner an opportunity of hearing.
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