2016 (12) TMI 127 - HC - VAT and Sales Tax

Levy of turnover tax - high sea sales - the main grievance of the petitioner is that he was not afforded personal hearing before passing the impugned order inspite of his request insofar as relating to the the disallowance of exemption on high sea sales turnover of ₹ 7,18,29,120/- - Held that - since the Department is safeguarded by the attachment made in the bank account, I am inclined to set aside the impugned order dated 13.7.2016 insofar as it relates to the disallowance of exemption on high sea sales turnover of ₹ 7,18,29,120/-, and remit the matter back to the authority concerned for affording an opportunity of personal hearing to the petitioner in respect of disallowance of exemption on high sea sales turnover of ₹ 7,18,29,120/-, and to proceed in accordance with law, within a period of 8 weeks from the date of receipt of a copy of this order - petition allowed - decided in favor of petitioner.

Summary

Issues: Violation of principles of natural justice in passing the impugned order, opportunity of personal hearing not afforded to the petitioner, disallowance of exemption on high sea sales turnover

Analysis:
1. The petitioner, a Limited Company, reported turnover for the assessment year CST/2014-15, including consignment sale, stock transfer, interstate sales, and high seas sales. The first respondent issued a notice proposing to disallow sales to registered dealers under Section 8(1) of the CST Act, leading to a series of submissions and assessments by both parties.

2. The petitioner argued a violation of principles of natural justice, claiming that despite submitting Audit Report for high sea sales, no opportunity of personal hearing was provided by the first respondent. Citing the decision in SRC Projects Pvt.Ltd. vs. Commissioner of Commercial Taxes, the petitioner sought to set aside the order and remit the matter back for a fair hearing.

3. The learned Government Advocate for the first respondent acknowledged the need for a personal hearing and agreed to offer the petitioner the opportunity. However, the attachment made in the bank account was not contested by the petitioner, leading to a discussion on the implications of the SRC Projects Pvt.Ltd. decision on the case at hand.

4. The Division Bench's ruling in SRC Projects Pvt.Ltd. emphasized the importance of affording a personal hearing when demanded, ensuring fairness in procedure. In this case, the petitioner's grievance centered around the lack of personal hearing before the disallowance of exemption on high sea sales turnover of &8377; 7,18,29,120/-.

5. In light of the decision and the petitioner's plea, the impugned order related to the disallowance of exemption on high sea sales turnover was set aside. The matter was remitted back to the authority concerned with a directive to provide the petitioner with a personal hearing and proceed in accordance with the law within eight weeks from the date of the order.

6. Consequently, the writ petition was disposed of without costs, and connected miscellaneous petitions were closed, concluding the legal proceedings surrounding the violation of principles of natural justice and the need for a fair opportunity of personal hearing in the case at hand.