2014 (9) TMI 455 - HC - VAT and Sales Tax

Validity of order - Violation of principle of natural justice - Opportunity of personal hearing not granted - Held that - The petitioners in their reply, dated 20.12.2013 to the notices dated 30.11.2013 and 18.12.2013 has made a specific request for opportunity of personal hearing on a specific date and time in order to appear in person and once again submit documents relevant to their reply. Admittedly, such opportunity has not been provided to the petitioner. A scrutiny of materials place before this Court would also disclose that the petitioner had fully cooperated with the first respondent, by furnishing the details and documents. Since opportunity of personal hearing has not been afforded to the petitioner, this Court is of the view that they have put to prejudice and hence, on this sole ground, the impugned orders are liable to be interfered with - Decided partly in favour of assessee.

Summary

Issues:
1. Assessment of VAT for multiple years.
2. Lack of opportunity for personal hearing during VAT audit.
3. Legality of impugned orders based on lack of personal hearing.

Analysis:
1. The judgment pertains to writ petitions filed by a company challenging the VAT assessment for six consecutive years. The company, M/s. Bata India Limited, was subjected to an audit by Enforcement Wing Officers, leading to the discovery of discrepancies in turnover reporting, disallowance of exempted sales, reversal of Input Tax Credit (ITC), and untaxed purchases. The company cooperated by submitting details and documents in response to notices issued by the tax authorities.

2. Despite the company's cooperation, the tax authorities issued impugned orders in May 2014, overruling the company's objections without providing a personal hearing. The company contended that the orders merely repeated the notices and did not consider the materials presented, citing legal precedents to support their argument for a personal hearing. On the other hand, the Additional Government Pleader argued that the company was given opportunities to present objections and relevant documents, and the orders were valid.

3. The High Court analyzed the submissions and documents before it and found that the company had indeed requested a personal hearing in their reply to the notices but was not granted one. The Court concluded that the lack of a personal hearing prejudiced the company's case, leading to the decision to partly allow the writ petitions. The impugned orders were set aside, and the matters were remitted back to the tax authorities for fresh adjudication, with a specific direction to provide the company with a personal hearing within four weeks for a fair decision-making process. No costs were awarded in the judgment.