2016 (5) TMI 734 - HC - VAT and Sales Tax

Seeking quashment of assessment order and auction notice - Arbitrariness in making an order by an authority and violation of principle of natural justice - Petitioners were thrice accommodated by the learned Assessing Authority and they waited till the last date of limitation for passing the final assessment order and fixed the case for 28/02/2015 but on that date Shri Narendra Bam, learned CA, who was engaged by the petitioners failed to appear nor he pointed out the authority that Shri Radheshyam Carpenter, learned Senior CA was appointed on his behalf or he is assisting Shri Radheshyam Carpenter, learned Senior CA and he is sick and was advised for bed-rest. Held that - no material has been produced by the petitioners that the assessment order dated 28/02/2015 is contrary to the statutory provisions or principle of law, but looking to the huge liability against the petitioners in the interest of justice, we grant one more opportunity to the petitioners to appear through their counsel before the respondent No.2. Accordingly, the impugned order dated 23/07/2015 by which his application under Section 34 of VAT Act, 2002 has been rejected is set aside, subject to depositing 10% of the amount in question within two weeks from the date of this order and on producing the material/evidence. The learned authority thereafter shall consider the material produced by the petitioner and pass the order afresh on application under Section 34 of VAT Act, 2002. - Decided partly in favour of petitioner

Summary

Issues:
Quashment of Assessment Order and Auction Notice on grounds of arbitrariness and violation of natural justice.

Analysis:
The petitioners, a Private Limited Company trading in coal, sought quashment of the Assessment Order and Auction Notice dated 23/07/2015 and 17/08/2015 respectively, alleging arbitrariness and violation of natural justice. The petitioners were directed to pay substantial sums into the Government Treasury for the assessment year 2012-2013. Despite not appealing against the Assessment Order, they filed for a review citing the illness of their counsel, supported by a doctor's certificate. The application under Section 34 of the VAT Act, 2002 was dismissed on grounds of lack of interest in assessing tax liability and absence of prior permission for the case's reopening.

The petitioners argued that their application was not considered on merit, no hearing was provided, and immediate attachment proceedings were initiated without due consideration. They emphasized the need for a notice of hearing and an opportunity for the petitioners, asserting that they should not suffer for their counsel's negligence. The respondents contended that the petitioners failed to produce evidence despite multiple opportunities, leading to an ex-parte order. They highlighted the availability of a statutory appeal under Section 46 of the VAT Act, 2002, which the petitioners bypassed to avoid pre-deposit.

The Court examined the order-sheets and relevant provisions of Section 34 of the VAT Act, 2002. It noted that the appointed counsel failed to produce any material or documents despite multiple appearances, leading to the final assessment order on the last date of limitation. Drawing distinctions from precedent cases, the Court granted the petitioners another opportunity to present evidence through their counsel, setting aside the earlier rejection of the application under Section 34 of the VAT Act, 2002 subject to a deposit requirement.

In conclusion, the Court allowed both writ petitions in part, providing the petitioners with a chance to present evidence for reconsideration by the authority within a specified timeframe. Failure to comply with the deposit requirement would result in the automatic dismissal of the petitions. No costs were awarded in this judgment.