2018 (4) TMI 1079 - HC - VAT and Sales Tax

Revision of assessment - inter-state sales - defective C-Forms - principles of natural justice - Held that - If it is found in a given case that the C-Forms produced by a dealer are defective, it is incumbent upon the assessing authority to provide the dealer an opportunity to cure the defects before the same are rejected and assessment is completed on that basis - SCN vitiated for non-compliance of the principles of natural justice - petition allowed.

Summary

Issues:
Assessment revision under Central Sales Tax Act for the year 2016-17; Non-production of C Forms for claimed concessional rate of tax; Legality of Ext.P6 order without affording further opportunity of hearing; Compliance with principles of natural justice.

Analysis:
The petitioner, an assessee under the Central Sales Tax Act, faced proceedings initiated by the assessing authority for revising the assessment for the year 2016-17. The issue arose when the petitioner, despite effecting interstate sales and claiming a concessional tax rate, failed to produce the required C Forms for transactions totaling ?48,19,300. Subsequently, the assessing authority issued Ext.P7 notice highlighting this non-compliance. The petitioner contended that although C-forms were produced in response to Ext.P7, Ext.P6 order was passed without granting a further hearing, alleging the C-Forms were defective.

During the hearing, both the petitioner's counsel and the Government Pleader presented their arguments. The Government Pleader, upon instructions, admitted that the defects in the C-forms were not communicated to the petitioner before the issuance of Ext.P6 order. This lack of prior notice regarding the identified defects raised concerns regarding procedural fairness and adherence to the principles of natural justice.

The judgment emphasized that if a dealer's C-Forms are deemed defective, the assessing authority must allow the dealer an opportunity to rectify the defects before rejecting the forms and finalizing the assessment based on such rejection. In this context, the court concluded that Ext.P6 order was flawed due to the absence of compliance with the principles of natural justice. Consequently, the writ petition was allowed, Ext.P6 order was set aside, and the assessing authority was directed to issue fresh orders after providing the petitioner with an opportunity to rectify any identified defects in the C-forms. This ruling underscored the significance of procedural fairness and the necessity of affording parties a fair hearing before making determinative decisions in tax assessment proceedings.