2025 (1) TMI 591 - HC - GST

Rectification order - enhancement of liability - petitioner was duly communicated the appeal order as required under Rule 121 of the Odisha Value Added Tax Rules, 2005 or not - HELD THAT - Proviso in sub-section(1) of section 81 says that an amendment, which has effect of enhancing an assessment or otherwise increase liability of the assessee shall not be made unless the authority has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard. Going by submission made on behalf of revenue, if there has been increase in the amount of interest by the rectification, petitioner was entitled to a notice for being heard. The concept of aggregate demand remaining same is not supported by the provision. Impugned rectification order and the intimation are set aside and quashed. Petitioner will forthwith communicate certified copy of this order to the authority within 24th January, 2025 and obtain date of hearing, for purpose of rectification. In event of omission to communicate as directed, impugned order and intimation will automatically stand restored. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the petitioner was duly communicated the appeal order as required under Rule 121 of the Odisha Value Added Tax Rules, 2005.
Whether the rectification order, which allegedly enhanced the liability of the petitioner, was issued without providing an opportunity for a hearing, in violation of Section 81(1) proviso of the Odisha Value Added Tax Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Communication of the Appeal Order

Relevant Legal Framework and Precedents: Rule 121 of the Odisha Value Added Tax Rules, 2005 mandates that a copy of the order of assessment, appeal, or revision must be supplied to the concerned dealer free of cost and without application.
Court's Interpretation and Reasoning: The court examined whether the petitioner was aware of the appeal order and whether it was communicated as per the legal requirement. The court noted discrepancies in the dates mentioned in the intimation and the rectification order.
Key Evidence and Findings: The petitioner argued that the appeal order was never communicated. The respondent provided a postal receipt as evidence of dispatch. However, the court identified a typographical error in the date of the order mentioned in the intimation.
Application of Law to Facts: The court concluded that the petitioner was aware of the rectification order, despite the typographical error in the intimation. This awareness was demonstrated by the petitioner's reference to the order in the writ petition.
Treatment of Competing Arguments: The petitioner contended non-receipt of the appeal order, while the respondent argued that the order was communicated. The court found merit in the petitioner's claim of confusion due to the typographical error.
Conclusions: The court found that the petitioner was aware of the rectification order, but the error in the intimation created confusion.

Issue 2: Opportunity for Hearing on Rectification Order

Relevant Legal Framework and Precedents: Section 81(1) proviso of the Odisha Value Added Tax Act requires that any amendment enhancing an assessment or increasing liability must be preceded by a notice and opportunity for the assessee to be heard.
Court's Interpretation and Reasoning: The court interpreted that any increase in liability, even if offset by a reduction elsewhere, necessitates a hearing opportunity.
Key Evidence and Findings: The petitioner claimed an enhancement without a hearing. The respondent stated that the rectification reduced tax but increased interest, keeping the aggregate demand unchanged.
Application of Law to Facts: The court applied the legal requirement for a hearing to the facts, emphasizing that the concept of aggregate demand does not negate the need for a hearing when liability components change.
Treatment of Competing Arguments: The petitioner argued for a hearing due to increased interest. The respondent's argument of unchanged aggregate demand was not supported by the court.
Conclusions: The court concluded that the petitioner was entitled to a notice and hearing due to the change in interest liability.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The concept of aggregate demand remaining same is not supported by the provision."
Core Principles Established: The necessity for clear communication of orders and the requirement for a hearing when any component of liability is increased, irrespective of the aggregate demand.
Final Determinations on Each Issue: The court set aside and quashed the impugned rectification order and the intimation, directing the petitioner to communicate the certified copy of the court's order to the authority for a hearing on rectification.

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