2024 (8) TMI 1270 - HC - VAT and Sales Tax

Challenge to assessment order - required period of seven (07) days for hearing was not granted to the petitioner - violation of principles of natural justice - HELD THAT - This Court would have to accept the fact that the notice of assessment was sent by the 1st respondent only on 25.06.2021 and the period of seven (07) days mentioned in the said notice was not granted to the petitioner before an assessment order was passed on 28.06.2021. There also remains the question of whether the petitioner received this notice as the petitioner has denied the receipt of notice. The petitioner had not been granted adequate opportunity to set forth his case. This Writ Petition is allowed setting aside the assessment order of the 1st respondent dated 28.06.2021 and the matter is remanded back to the 2nd respondent who is the assessing authority to the petitioner now for completing the assessment for the year 2017-2018 after giving due notice and opportunity to the petitioner.

Summary

Issues: Assessment order challenged on grounds of violation of natural justice and A.P. VAT Rules.

Analysis:
The petitioner, a registered dealer under the Central Sales Tax Act, challenged an assessment order issued by the 1st respondent. The petitioner had conducted sales within and outside the State, including exports. The assessment order was based on the petitioner's alleged failure to respond to a show-cause notice within the stipulated seven-day period. Subsequently, the petitioner sought to submit necessary forms post-assessment, which was partially accepted by the 2nd respondent. However, the 2nd respondent declined to modify the assessment order concerning tax exemption on export sales, citing it as impermissible re-assessment. The petitioner contended that the assessment order violated principles of natural justice and A.P. VAT Rules. The petitioner argued that the notice was sent by ordinary post instead of registered post, and the seven-day response period was not adhered to, depriving adequate opportunity for a defense.

The petitioner's counsel emphasized that Rule 64 of A.P. VAT Rules mandates serving notices personally, via registered post, or email. It was asserted that the notice in question was dispatched late and not through the prescribed methods, hence violating procedural requirements. The counsel contended that the petitioner was not granted the full seven days for response as per the notice, further supporting the claim of inadequate opportunity to present a case. On the other hand, the Government Pleader for Commercial Taxes defended the notice's validity, stating that email service was sufficient under Rule 64. Even if the email service was flawed, it was argued that it did not affect the notice period. Notably, there was no evidence provided by the respondents to prove email service. The Court acknowledged the discrepancies in the notice dispatch and the denial of receipt by the petitioner, concluding that the petitioner was indeed deprived of a fair opportunity to present their case.

Consequently, the High Court allowed the Writ Petition, setting aside the assessment order of the 1st respondent and remanding the matter to the 2nd respondent for reassessment for the year 2017-2018. The Court directed the assessing authority to provide proper notice and opportunity to the petitioner, emphasizing the importance of adherence to procedural fairness. The judgment highlighted the significance of upholding principles of natural justice and procedural rules in assessment proceedings.