2020 (7) TMI 314 - HC - VAT and Sales Tax

Principles of Natural Justice - allegation is that no show-cause notice was served on the petitioner and even details of the show-cause notice like reference number or date of the show cause notice are not mentioned in the impugned order - petitioner claims to have closed down its business in June, 2017 - HELD THAT - Sri J.Anil Kumar, Special Counsel for Commercial Taxes states, on instructions, that since the petitioner claims to have closed down its business in June, 2017, and since the impugned order does not make any reference to the date of service of the show-cause notice or intimation of personal hearing to the petitioner, the impugned order be set aside and the matter be remitted to the 1st respondent. Thus, without serving a show-cause notice on the petitioner, it was not open to the 1st respondent to pass the impugned order and the 1st respondent also could not have denied a personal hearing to the petitioner since the assessment in question relates to April, 2015 to March, 2016 and the impugned order was passed almost four (4) years after the expiry of the said period - the 1st respondent is directed to serve a show-cause notice in person or by RPAD on the petitioner; the petitioner is granted four (4) weeks time from the date of receipt of the show-cause notice to file explanation thereto along with supporting material - petition allowed by way of remand.

Summary

Issues:
1. Assessment order passed without serving show-cause notice
2. Tax demand on inter-State sales and Branch Transfers
3. Lack of consideration for F-Forms and C-Forms in the order
4. Absence of personal hearing opportunity for the petitioner

Analysis:
1. The petitioner, a company trading in consumer electronics, challenged an Assessment Order demanding tax without being served a show-cause notice. The petitioner highlighted the absence of details regarding the show-cause notice in the order and the lack of intimation for a personal hearing, especially since the business had been closed down and premises leased out. The court agreed that passing the order without serving a show-cause notice was improper, leading to setting aside of the Assessment Order.

2. The petitioner contested the taxation of inter-State sales and Branch Transfers as local sales, contrary to the CST Act. The court noted the absence of consideration for F-Forms and C-Forms generated online, which could support the transactions. The Special Counsel for Commercial Taxes acknowledged the closure of the petitioner's business and recommended setting aside the order due to procedural lapses.

3. The court emphasized the necessity of serving a show-cause notice before passing an assessment order, especially considering the significant delay in issuing the impugned order after the relevant assessment period. It directed the 1st respondent to serve a show-cause notice personally or by RPAD, granting the petitioner four weeks to respond with supporting material and ensuring a personal hearing opportunity.

4. The judgment allowed the Writ Petition, setting aside the Assessment Order and instructing the 1st respondent to follow due process by serving a show-cause notice, providing a chance for explanation with supporting material, conducting a personal hearing, and issuing a reasoned order in compliance with the law. The court closed any pending miscellaneous petitions in the matter without imposing costs on either party.