2021 (1) TMI 310 - HC - VAT and Sales Tax

Validity of assessment order - 'C' Forms - petitioner contends that the 3rd respondent had issued notices on 26.08.2019 and 19.11.2019, and a Final Notice dt.07.03.2020 through e-mail to petitioner; and that such a mode of service is not contemplated in Rule 64(1)(b) of the Telangana VAT Rules, 2005 - HELD THAT - Respondents, does not dispute that Rule 64(1) (b) of the Telangana VAT, 2005 which is applicable does not contemplate service of notices through e-mail on an assessee. He also does not dispute the proposition that it is open to an assessee to submit 'C' Forms even after the finalization of the assessment. There has been a violation of principles of natural justice causing grave prejudice to petitioner - the matter is remitted to 3rd respondent for fresh consideration; the 3rd respondent shall serve on petitioner pre-assessment show-cause notice indicating the turnover proposed to be taxed and the tax proposed to be levied thereon in accordance with Rule 64(1)(b) of the Telangana VAT Rules, 2005 - Petition allowed by way of remand.

Summary

Issues:
Challenge to Assessment Order under Central Sales Tax Act, 1956; Validity of service of notices through e-mail; Rejection of 'C' Forms by the Assessing Authority; Illegal collection of funds by the Assessing Authority without serving Garnishee Notice; Violation of principles of natural justice.

Analysis:
The petitioner challenged the Assessment Order passed by the 3rd respondent for the period 2015-16 under the Central Sales Tax Act, 1956. The contention was that the notices issued by the 3rd respondent through e-mail did not comply with Rule 64(1)(b) of the Telangana VAT Rules, 2005. Additionally, the petitioner's 'C' Forms submitted to the office of the 3rd respondent were refused to be acknowledged, leading to further dispute.

The petitioner relied on a previous decision of the Andhra Pradesh High Court in M/s. Godrej Agrovet Ltd. vs C.T.O., Eluru, where the Assessing Authority was directed to accept 'C' Forms even if filed after the finalization of assessments. It was also highlighted that the 3rd respondent had collected funds from the petitioner's bank account without serving a Garnishee Notice, which was deemed illegal.

The learned Special Counsel for Commercial Taxes representing the respondents did not dispute that the service of notices through e-mail was not in line with the applicable Rule. It was acknowledged that an assessee could submit 'C' Forms post the finalization of assessment, emphasizing the openness of this provision.

The High Court, comprising of Justice M.S.Ramachandra Rao and Justice T.Amarnath Goud, concluded that there had been a violation of principles of natural justice causing prejudice to the petitioner. Consequently, the Writ Petition was allowed, setting aside the Assessment Order and remitting the matter to the 3rd respondent for fresh consideration. The 3rd respondent was directed to follow due process, serve a pre-assessment show-cause notice, grant the petitioner an opportunity to file objections, conduct a personal hearing, and pass a reasoned order in accordance with the law.

As a final decision, the Writ Petition was allowed without any order as to costs, and any pending miscellaneous applications in the matter were ordered to be closed.