2020 (5) TMI 316 - HC - VAT and Sales Tax

Principles of Natural Justice - Reassessment of tax - CST Act - penalty under the M.P. Commercial Tax Act - periods from 01.04.1993 to 31.03.1994 and from 01.04.1994 to 31.03.1995 - no opportunity during the reopening and reassessment proceedings was afforded to the petitioner and the same were conducted ex parte - HELD THAT - It appears that grant of an opportunity to cross-examine is a concomitant of the expression Reasonable Opportunity . In the instant case, the matter was remanded by the State only for the purpose that opportunity of cross-examination which was not afforded to the petitioner in respect of the documents of the Krishi Upaj Mandi Samiti, Guna (M.P.) should now be afforded. Since the Appellate Authority has passed the impugned order by assigning reasons which cannot stand the test of reasonableness as authority fails to even address the issue in its right perspective, this Court is of the considered view that the power of judicial review deserves to be exercised u/Art.226 of Constitution in favour of the petitioner. The respondents are now directed to conduct reassessment proceedings by granting reasonable opportunity to the petitioner of cross-examination in respect of the documents pertaining to the Krishi Upaj Mandi Samiti, Guna (M.P.) - Petition allowed.

Summary

Issues Involved:
1. Dismissal of revision petition and reassessment of tax and penalty.
2. Opportunity for cross-examination during reassessment.
3. Validity of the appellate authority's decision.
4. Exercise of judicial review under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Dismissal of Revision Petition and Reassessment of Tax and Penalty:
The petition challenges Annexure P-14 dated 31.01.2012, which upheld the reassessment of tax under the Central Sales Tax Act and corresponding penalty under the M.P. Commercial Tax Act for the periods from 01.04.1993 to 31.03.1994 and from 01.04.1994 to 31.03.1995. The petitioner firm, a registered dealer, claimed that its business ceased operations in 1999 due to heavy losses. The initial assessments were completed in 1997 and 1998 based on verified books of accounts. However, the assessments were reopened based on information from Krishi Upaj Mandi Samiti, Guna. The petitioner alleged that the reassessment was conducted ex parte without providing an opportunity for representation, leading to additional tax and penalties.

2. Opportunity for Cross-Examination During Reassessment:
The petitioner argued that the reassessment proceedings violated the principle of "reasonable opportunity" as they were not allowed to cross-examine the records from Krishi Upaj Mandi Samiti, Guna. The Revisional Authority had remanded the matter for fresh assessment, emphasizing the need for cross-examination. However, the Assessing Authority denied this request, leading to fresh reassessment orders on 07.12.2006. The petitioner contended that the denial of cross-examination rights was contrary to established legal precedents, including "State of Kerala Vs. K.T. Shaduli Grocery Dealer" and "Commissioner of Sales Tax, U.P., Lucknow Vs. Suresh Chand Jain."

3. Validity of the Appellate Authority's Decision:
The Appellate Authority dismissed the revision petition on 31.01.2012, reasoning that the records from Krishi Upaj Mandi Samiti, Guna, being 17 years old, were likely unavailable, making cross-examination futile. The court found this reasoning flawed, stating that the Appellate Authority should have attempted to procure the records or allowed the petitioner to produce them. The failure to address the issue of cross-examination properly rendered the decision unreasonable.

4. Exercise of Judicial Review Under Article 226 of the Constitution:
The court exercised its power of judicial review under Article 226, finding that the Appellate Authority's decision did not meet the standard of reasonableness. The court set aside the impugned order dated 31.01.2012 and the reassessment orders dated 07.12.2006. It directed the respondents to conduct reassessment proceedings, granting the petitioner a reasonable opportunity for cross-examination regarding the documents from Krishi Upaj Mandi Samiti, Guna. If the petitioner fails to produce the documents or if the Assessing Authority cannot procure them, the petitioner should be allowed to cross-examine any knowledgeable witness.

Conclusion:
The petition was allowed, setting aside the impugned orders and directing fresh reassessment proceedings with an opportunity for cross-examination. The decision underscores the importance of procedural fairness and the right to cross-examine in tax reassessment cases.