2019 (6) TMI 62 - HC - VAT and Sales Tax

Writ against assessment order - principles of natural justice - audit of taxes for assessment year 2010-2011 - alternative efficacious remedy of appeal - production of books of accounts and related documents for verification - rejection of refund without notice - It is the case of the petitioner that ex-parte proposition notice was issued on 14.09.2016 and the said notice was received on 24.09.2016 - HELD THAT - The contention that no proposition notice was issued, cannot be accepted in view of the fact that the petitioner has received the notice dated 14.09.2016 issued under Sections 39(1), 36 and 72(2) of KVAT Act, 2003. Further the representative of the petitioner appeared before the respondent assessing authority and produced the books of accounts. Therefore, the petitioner cannot contend that there is violation of principles of natural justice. Section 52 of the KVAT Act, provides for an appeal before the First Appellate Authority and the petitioner can very well raise all such objections including the violation of principles of natural justice before the Appellate Authority. In view of availability of an alternative efficacious remedy of appeal to the petitioner, the learned Single Judge has rightly dismissed the writ petition with liberty to raise such objections before the next Higher Authority. Appeal dismissed.

Summary

Issues:
1. Dismissal of writ petition due to the availability of alternative remedy.
2. Violation of principles of natural justice in the reassessment process.
3. Rejection of refund claim without notice.
4. Maintainability of writ petition under Article 226.

Issue 1: Dismissal of writ petition due to the availability of alternative remedy.
The petitioner, engaged in the manufacture of various products, filed a writ petition seeking to quash the reassessment order and demand notice passed by the 2nd respondent. The Commissioner for Commercial Taxes proposed auditing for the assessment year 2010-2011. The petitioner claimed that no proposition notice for reassessment was issued after the verification of books of accounts. The High Court observed that the learned Single Judge rightly dismissed the writ petition, stating that the petitioner had an alternative efficacious remedy of raising objections before the next higher authority. The Court emphasized that the petitioner participated in the proceedings by producing the books of accounts and, therefore, could raise objections before the Appellate Authority.

Issue 2: Violation of principles of natural justice in the reassessment process.
The petitioner argued that the writ petition's dismissal was violative of principles of natural justice as no proposition notice was issued before reassessing the tax liability. However, the Court found that a notice dated 14.09.2016 was issued under relevant sections of the KVAT Act, which the petitioner received on 24.09.2016. The petitioner had the opportunity to produce the books of accounts after seeking some time. The Court concluded that the petitioner's contention of a violation of natural justice was unfounded since the petitioner appeared before the assessing authority and produced the necessary documents.

Issue 3: Rejection of refund claim without notice.
The petitioner also challenged the unilateral rejection of a refund claim without any notice. The Court noted that the rejection of the refund claim was deemed illegal and violative of natural justice. However, the Court did not find this ground sufficient to maintain the writ petition under Article 226, emphasizing the availability of an alternative remedy through the appellate process.

Issue 4: Maintainability of writ petition under Article 226.
Both parties presented their arguments regarding the maintainability of the writ petition under Article 226. The petitioner contended that the writ petition should be maintained due to the alleged violation of natural justice. In contrast, the respondents argued that the writ petition was rightly dismissed by the Single Judge as the petitioner had an alternative remedy of appeal against the reassessment of tax. The High Court agreed with the respondents, stating that the petitioner could raise objections before the Appellate Authority and, therefore, upheld the dismissal of the writ petition.

In conclusion, the High Court dismissed the writ appeal, affirming the decision of the learned Single Judge, emphasizing the availability of an alternative efficacious remedy for the petitioner to raise objections before the next higher authority.