2017 (5) TMI 1322 - HC - VAT and Sales Tax

Validity of assessment proceedings - natural justice - Held that - There is absolutely no noting on the file to indicate what happened to the orders passed by the OHA. There appears to be complete failure on the part of the VATO to act in accordance with law and, in particular, to abide by the order of the superior authority, in this case, the OHA and to carry out the mandate of the OHA s orders. With the impugned orders bristling with so many obvious illegalities, the question of the Petitioner now being relegated to the OHA, as suggested by the counsel for the Respondent, does not arise - petition allowed.

Summary

Issues:
Challenges to default assessment orders under DVAT Act for AY 2006-07 and AY 2007-08, failure to comply with time-bound directions, legality of demands raised, authority of OHA, and proper assessment proceedings.

Analysis:
1. The petitions filed under Article 226 of the Constitution challenged default assessment orders for AY 2006-07 and AY 2007-08. The Petitioner, a registered dealer under DVAT Act, faced demands for tax and interest, leading to objections filed against these demands under Section 74(1) of the DVAT Act.

2. The Objection Hearing Authority disposed of objections, directing consideration of statutory forms for exemption and verification of export sales. However, for years, no steps were taken by the VATO regarding remanded assessment proceedings, until writs of demand were issued in 2017, followed by orders imposing tax and interest without proper assessment.

3. The OHA's directions were not followed, raising concerns about the legality of demands made far beyond the time period envisaged for fresh assessment proceedings. The failure to comply with time-bound directions was highlighted, citing a similar judgment where demands were set aside due to non-compliance with OHA's directions.

4. The Court observed a lack of action by the VATO in accordance with the law and failure to abide by the OHA's orders. The Petitioner's counsel argued that demands couldn't be raised without proper assessment as per DVAT Act, emphasizing the necessity of assessment before demanding tax, interest, or penalty.

5. The Respondent's counsel suggested examination by the OHA, but given the illegalities in the impugned orders, the Court deemed the Petitioner's referral back to OHA unnecessary and potentially delaying. Consequently, the writ petitions were allowed, quashing the writs of demand and subsequent orders issued by the VATO for AYs 2006-07 and 2007-08.