2024 (10) TMI 799 - HC - VAT / Sales Tax

Challenge to assessment order - non-application of mind - violation of principles of natural justice - HELD THAT - Though the impugned assessment order dated 24 May 2023 may be vitiated by non-application of mind, failure of natural justice, and even breach of Section 23 (4) of the MVAT Act, which statutorily incorporates the requirement of personal hearing, we cannot infer any manipulation, backdating, or subterfuge. Besides, there was no unreasonable delay in communicating the impugned assessment order dated 24 May 2023. The issue of this order being made beyond the statutorily prescribed limitation period also does not arise in this matter. The facts and circumstances that persuaded not to accede to the prayer for remand in Writ Petition Nos. 11929 of 2023 and 11915 of 2023 are not the facts involved in the present Petition. Therefore, by balancing the interest of the Revenue and the Petitioners entitlement to fair treatment, it is satisfied that a remand would be in order after quashing the impugned assessment order. The impugned assessment order dated 24 May 2023 is quashed and set aside - the matter is remanded to the assessing officer to make a fresh assessment order for FY 2015-2016 after giving the Petitioners reasonable opportunity of being heard - petition disposed off by way of remand.

Summary

Issues:
Challenge to impugned assessment order dated 24 May 2023 for FY 2015-2016 under the Maharashtra Value Added Tax Act, 2002 (“MVAT Act”).

Analysis:

1. The Petitioners, established in accordance with Luxembourgian Laws, challenged the assessment order dated 24 May 2023 for FY 2015-2016, seeking to levy VAT on royalty payments made against the license to use IPRs. The Petitioners contended that the notice served did not provide a reasonable opportunity of being heard, violating the principles of natural justice and Section 23 (4) of the MVAT Act. The impugned order referenced written submissions that were never filed, indicating a non-application of mind.

2. The Respondents acknowledged errors in the assessment orders and proposed actions against the assessing officer for negligence. While the Respondents conceded that the impugned assessment order could be set aside, they requested a remand for a fresh assessment to protect the Revenue's interests. The Court, however, declined the remand request in previous cases due to issues of backdating orders and delayed communication.

3. In the present case for FY 2015-2016, the Court noted that the impugned assessment order was not backdated, and there was no unreasonable delay in its communication. Despite finding flaws in the order related to natural justice and the MVAT Act, the Court determined that a remand would be appropriate after quashing the assessment order to ensure fair treatment and balance the interests of the Revenue and the Petitioners.

4. Consequently, the Court disposed of the Petition by quashing the assessment order dated 24 May 2023 and remanding the matter to the assessing officer for a fresh assessment. The Petitioners were directed to provide their e-mail IDs for future communication, and all contentions on merits were left open for the assessing officer's consideration. No costs were awarded, and compliance with the order was mandated.

This detailed analysis outlines the issues raised, the arguments presented by both parties, the Court's reasoning, and the final decision regarding the challenge to the assessment order under the MVAT Act for FY 2015-2016.