2019 (4) TMI 464 - HC - VAT and Sales Tax

Principles of natural justice - pre-assessment notice - it is contended that the the pre-assessment notice was not adverted to in a proper manner and the assessing authority had failed to give any reasoning for discarding the contentions raised in the objections - Held that - The non consideration of the objections will definitely vitiate the order of assessment. It is not a case as if the assessee had failed to submit any objections. When the assessment authority had accepted the objections and reproduced the contentions thereof, it is obligatory on the part of the authority to consider those objections on merits and to state sufficient reasons for repelling those contentions. It is not a question of violating principles of natural justice; but it is a question which go deep into the sustainability of the assessment itself. When the assessing authority had accepted the objections which was filed on a subsequent date, which is evident from the assessment order itself, it contemplates an obligation on the part of the assessing authority to have afford an opportunity of personal hearing to the assessee, especially when the appellant had made a specific request in Ext.P2 objections for affording an opportunity for personal hearing. The 1st respondent is directed to pass fresh orders of assessment based on the objections already submitted by the appellant, after affording an opportunity of personal hearing to him - petition allowed by way of remand.

Summary

Issues:
Challenge to assessment under Section 25 of KVAT Act, 2003 - Failure to consider objections properly - Lack of reasoning in assessment order - Violation of natural justice - Non-consideration of objections vitiating assessment order - Non-affording of personal hearing opportunity before finalization of assessment.

Analysis:

1. The appellant challenged an assessment completed under Section 25 of the KVAT Act, 2003, primarily on the grounds that objections raised against the pre-assessment notice were not properly addressed, and the assessing authority failed to provide reasoning for dismissing the contentions raised in the objections. The Single Judge, while dismissing the writ petition, noted that lack of consideration of objections does not violate natural justice and directed the appellant to seek an appellate remedy. However, the appellate court found that the assessment order did not reflect any application of mind towards the objections, which is crucial in a quasi-judicial process like assessment.

2. The court observed that the non-consideration of objections would vitiate the assessment order. Even though the appellant had submitted objections, the assessing authority did not provide reasons for rejecting those contentions, which is essential for a valid assessment process. The court emphasized that the failure to consider objections goes beyond natural justice principles and affects the sustainability of the assessment itself.

3. Another contention raised was the lack of an opportunity for a personal hearing before finalizing the assessment. Citing a previous judgment, it was established that the opportunity of a personal hearing under Section 25(1) of the KVAT Act is mandatory and not merely a formality. The court referred to a Division Bench ruling, stating that a composite notice calling for objections and fixing a date for personal hearing constitutes sufficient compliance. In this case, even though the objections were filed after the stipulated date, the assessing authority accepted them, indicating an obligation to provide a personal hearing, especially when requested by the appellant.

4. Despite the availability of an appellate remedy, the court allowed the writ appeal, setting aside the judgment and quashing the assessment order. The assessing authority was directed to pass fresh orders based on the objections submitted by the appellant, after affording a personal hearing. The appellant was instructed to appear for the hearing, and the fresh assessment order was to be issued promptly within two weeks from the specified date to expedite the process and ensure procedural fairness in the assessment.