2019 (11) TMI 1065 - HC - VAT and Sales Tax

Imposition of penalty - KVAT Act - assessment order challenged on the ground that the assessment order was passed while the writ petition challenging the penalty proceedings were pending before this Court and that the assessment order was communicated to the petitioner after the date of the interim order that restrained the respondents from proceeding further with the pre-assessment notice issued to the petitioner. HELD THAT - On a perusal of Ext.P5 order, there is no mention with regard to any hearing having been extended to the petitioner. Under the said circumstances, without going into the other aspects urged by the petitioner in his challenge against Ext.P5 penalty order, Ext.P5 penalty order is set aside on the ground of violation of the rules of natural justice, and direct the 4th respondent to pass fresh orders in lieu thereof, after hearing the petitioner and taking note of the assessment order that has since been passed by the Assessing Authority, in relation to the petitioner for the same assessment year. Validity of assessment order - main challenge to the said order is only that the said order was passed at a time when there was a stay in operation, from this Court, against the passing of the said order - HELD THAT - In the absence of any jurisdictional error or allegation regarding violation of the rules of natural justice, this Court would not be justified in interfering with Ext.P6 order in these proceedings under Article 226 of the Constitution of India. The writ petition, in its challenge against Ext.P6 assessment order, therefore fails, and is accordingly dismissed. The recovery proceedings for recovery of amounts confirmed against the petitioner by Ext.P6 order shall be kept in abeyance, for a period of one month, so as to enable the petitioner to move the Appellate Authority in the mean while - petition dismissed.

Summary

Issues:
1. Challenge against penalty order under the KVAT Act for the assessment year 2016-2017.
2. Challenge against assessment order passed during the pendency of the writ petition.
3. Violation of rules of natural justice in passing penalty order.
4. Passing of assessment order during the stay order period.

Analysis:
1. The petitioner challenged a penalty order under the KVAT Act for the assessment year 2016-2017. The respondent Assessing Authority issued a pre-assessment notice during the filing of the writ petition. However, an assessment order was passed for the same year before the writ petition was concluded. The petitioner contended that the assessment order was communicated after an interim order restrained further proceedings with the pre-assessment notice. The court set aside the penalty order due to a lack of hearing for the petitioner and directed a fresh order after providing an opportunity for a hearing.

2. The challenge against the assessment order passed during the pendency of the writ petition was based on the timing of the order concerning the stay order issued by the court. The court noted that the assessment order was dated before the stay order, and without jurisdictional error or violation of natural justice, it dismissed the challenge against the assessment order. Recovery proceedings were kept in abeyance for a month to allow the petitioner to move the Appellate Authority.

3. In the case of the penalty order, the court found a violation of the rules of natural justice as the petitioner was not heard before the order was passed. The court set aside the penalty order and directed the Assessing Authority to pass fresh orders after providing a hearing to the petitioner and considering the assessment order already passed for the same year.

4. The court dismissed the challenge against the assessment order passed during the stay order period, as there was no jurisdictional error or violation of natural justice. Recovery proceedings were temporarily halted to facilitate the petitioner's appeal process. The court disposed of one writ petition and dismissed the other.