2016 (8) TMI 172 - HC - VAT and Sales Tax

Interstate sale / export of services - whether the appellant filed supporting documents like declaration form C or Form F or Form E1/Form E2 or not - Held that - it is seen that the first respondent has accepted the receipt of documents on 18.9.2015 but has stated that the petitioner did not file objections nor filed declaration forms or other documents. The first respondent has not granted an opportunity of personal hearing, nor has he discussed about the documents which were received by him from the petitioner on 8.9.2015. Thus, the impugned order is a clear case of arbitrary exercise of power and in total violation of principles of natural justice. The impugned order is quashed and instead of remanding the matter to the first respondent, the first respondent is directed to place the entire assessment files to the second respondent, who shall nominate a competent officer having jurisdiction over the matter to proceed with the assessment. The said officer so nominated shall issue notice to the petitioner within a period of two weeks, fixing the date of personal hearing, peruse the documents that have been produced, and if any clarification is required, the same shall be clarified from the petitioner and thereafter, a speaking order shall be passed on merits and in accordance with law. - Matter remanded back.

Summary

Issues:

1. Violation of principles of natural justice in assessment order.
2. Arbitrary exercise of power by the Assessing Officer.
3. Failure of the Assessing Officer to respond to court orders.
4. Quashing of the impugned order and directing further assessment.

Analysis:

1. The petitioner, a public limited company providing software developer services, challenged a notice from the Assessing Officer alleging non-filing of supporting documents for tax exemptions under the CST Act. The petitioner contended that they explained their business nature and submitted relevant documents, but the Assessing Officer issued an order without granting a personal hearing, violating principles of natural justice. The High Court found the order arbitrary and set it aside, emphasizing the Assessing Officer's failure to respond to court proceedings.

2. Despite repeated intimation, the Assessing Officer did not participate in court proceedings, leading to an interim stay order. The court noted the Assessing Officer's irresponsible conduct and failure to fulfill duties, directing disciplinary action against him. The order, demanding a substantial tax amount, lacked clarity and justification, indicating an arbitrary exercise of power by the Assessing Officer, Thiru.N.Vadivel.

3. The court criticized the Assessing Officer's non-speaking order, emphasizing the violation of natural justice principles. The Assessing Officer's disregard for court instructions and failure to provide a fair opportunity for the petitioner to present their case led to the order's quashing. The court intervened due to the Assessing Officer's negligence and granted directions for a fair reassessment process under a competent officer nominated by the second respondent.

4. The High Court allowed the Writ Petition, highlighting the Assessing Officer's misconduct and the need for a just assessment process. The impugned order was quashed, and the responsibility for reassessment was shifted to a competent officer designated by the second respondent. The court emphasized the importance of following due process and natural justice, ensuring a fair and lawful assessment procedure for the petitioner.