2015 (5) TMI 378 - HC - VAT and Sales Tax

Validity of revised assessment orders - Exemption from tax to cotton tape - Finalization of proceedings - Held that - Proceedings have been finalized by passing Exts. P9 and P10 orders by the fourth respondent with unwarranted haste, and virtually denying an effective opportunity of hearing to the petitioner. In the said circumstance, this Court finds that, the said orders cannot stand the test of judicial scrutiny of this Court and they stand set aside. It will be open for the 4th respondent to finalize the proceedings afresh, after giving an effective opportunity to produce the relevant books of accounts and hearing. The proceedings as above shall be finalized and orders shall be passed in accordance with law, on the basis of merits involved and untrammelled by any direction from any corner, to have the assessment finalized in any particular manner. - Decided in favour of assessee.

Summary

Issues: Challenge to the validity of revised assessment orders for the assessment years 2005-2006 under the Kerala Value Added Tax Act.

Analysis:
The petitioner, primarily involved in 'coir mats' and 'cotton tapes,' claimed complete exemption from tax liability for 'cotton tapes' under Entry 51 of the KVAT Act. The assessment proceedings were initially concluded based on certain orders, but later, the proceedings were revised by the 5th respondent under Section 56 of the KVAT Act, possibly due to an audit objection. The petitioner received notices under Section 25(1), requesting time to respond, which was not granted, leading to the finalization of revised assessment orders (Exts. P9 and P10) challenged in the writ petition.

During the hearing, the petitioner's Senior Counsel argued that the proceedings were conducted improperly, influenced by external factors, and were time-barred. The Government Pleader countered this argument by presenting facts and figures from the record. The court noted that the assessing officer allowed only three days for objections, despite the petitioner's request for more time. The respondent justified the haste in finalizing the proceedings due to the case's long pending nature and the need to report to higher authorities.

Ultimately, the court found that the revised assessment orders (Exts. P9 and P10) were hastily finalized without providing an adequate opportunity for the petitioner to present their case. As a result, the court set aside the orders and directed the 4th respondent to reexamine the proceedings, ensuring a fair opportunity for the petitioner to present relevant evidence and arguments. The new assessment should be based on merit and without external influence, to be completed within six weeks from the judgment date. The petitioner was instructed to provide a copy of the judgment and writ petition to the respondent for further action, leading to the disposal of the writ petition.