2013 (5) TMI 86 - HC - VAT and Sales Tax

Penalty was imposed - According to assessee the Ext.P3 penalty order was passed in relation to the assessment year 2010-11 and the same was issued without SCN or opportunity of hearing, this writ petition was filed. - Held that - A reading of Ext.P2, the notice, shows that the turnover quantified therein was Rs.1,16,30,000/- and the penalty proposed was Rs.9,39,704/-. This itself therefore proves that SCN referred to in Ext.P3 penalty order is not Ext.P2 SCN. In such circumstances, I am inclined to accept the case of the petitioner that Ext.P3 penalty order was not preceded by a SCN. For that reason, I direct that Ext.P3, the order now issued be treated as notice issued to the petitioner u/s 67 of the KVAT Act in relation to the assessment year 2010-11. It will be open to the petitioner to file his objection to Ext.P3 within 3 weeks from today.

Summary

Issues:
1. Issuance of show cause notice and penalty order under the KVAT Act for assessment years 2010-11 and 2011-12 without proper procedure.

Analysis:
The petitioner, a dealer under the KVAT Act engaged in the trade of river sand, was issued a notice (Ext.P1) to produce books of accounts for the assessment years 2010-11 and 2011-12. Subsequently, a show cause notice (Ext.P2) proposing a penalty for the year 2011-12 was issued, to which the petitioner responded. However, a penalty order (Ext.P3) was passed in relation to the assessment year 2010-11 without a show cause notice or opportunity of hearing, leading to the filing of this writ petition.

The respondents argued that the show cause notice (Ext.P2) was issued under Section 67 of the KVAT Act for the assessment year 2010-11, contradicting the petitioner's claim that the penalty order (Ext.P3) was issued without proper notice. The discrepancy arose as the notice proposed a penalty based on a different turnover amount than what was actually quantified in the show cause notice.

The court found that the penalty order (Ext.P3) was not preceded by a valid show cause notice, as the turnover amount and penalty proposed in the notice (Ext.P2) did not match the details in the penalty order. Consequently, the court directed that Ext.P3 be treated as a notice issued to the petitioner under Section 67 of the KVAT Act for the assessment year 2010-11. The petitioner was given three weeks to file objections, after which an opportunity of hearing would be provided, leading to the issuance of a fresh order by the 2nd respondent based on the objections raised.

In conclusion, the writ petition was disposed of with the directive for the petitioner to present a copy of the judgment and writ petition to the 2nd respondent for compliance with the court's decision.