2021 (10) TMI 322 - HC - VAT and Sales Tax

Violation of principles of natural justice - Rejection of petitioners application for rectification of the assessment order - adequate hearing before the Assessing Officer passed in order of assessment or not - HELD THAT - The petitioner has gone on affidavit stating that no such notice was received by the petitioner after 23.11.2020. Even, otherwise, it is difficult to believe that a company which was duly represented by the legal representative virtually on all previous hearing dates would suddenly abandon the assessment proceedings and incur the risk of substantial ex-parte liability arising against it - in facts of the present case the assessee deserves an opportunity of making further arguments before the Assessing Officer. It is well known through series of judgments of the Supreme Court that where there is clear breach of principles of natural justice, availability of alternative remedy would not prevent the High Court from exercising this jurisdiction - the case of the department appears to be that office value is nothing but the value of the goods indicated in the transport permit granted from time to time. If that be so, surely the petitioner cannot claim surprise about the contents of such permits granted by the department. However, if the department wishes to rely upon any other documents or material which is not within the knowledge or possession of the petitioner, the principles of natural justice require that the same must be provided to the petitioner before it can be used against it. The order rejecting the petitioner's application for rectification does not survive. The assessment proceedings are revived and restored to file of the Assessing Officer - Application disposed off.

Issues Involved:
1. Breach of principles of natural justice.
2. Comparison of dealer’s value with "office value."
3. Consideration of F-Form submitted by the petitioner.
4. Denial of rectification application under section 74 of the TVAT Act.
5. Request for virtual hearing due to COVID-19.

Issue-wise Detailed Analysis:

1. Breach of Principles of Natural Justice:

The petitioner argued that the assessment order dated 26.02.2021 was passed without completing the hearing. The petitioner’s representative was present on 23.11.2020, but the hearing did not proceed, and no further communication or notice was received until the assessment order was passed. The court noted that the Assessing Officer did not deny the petitioner’s presence on 23.11.2020 and failed to provide evidence of subsequent notices. The court emphasized that the petitioner deserved an opportunity to make further arguments, especially since several duty-paid documents were on record but possibly ignored due to the absence of the petitioner’s representative at the last hearing.

2. Comparison of Dealer’s Value with "Office Value":

The petitioner contended that the Assessing Officer compared the dealer’s value with the "office value," which was gathered behind the petitioner’s back and used in the assessment without sharing it. The Government Advocate clarified that the "office value" referred to the value indicated in transportation permits, which were available to the petitioner. The court acknowledged that if the "office value" was derived from transportation permits, the petitioner should not claim surprise. However, any other documents or materials not within the petitioner’s knowledge must be shared before being used against them.

3. Consideration of F-Form Submitted by the Petitioner:

The petitioner argued that the Assessing Officer erroneously concluded that the F-Form was not produced with the return but only at the time of assessment, considering it as an inter-state sale. The court did not delve deeply into this issue due to the primary focus on the breach of natural justice and the need for a fresh hearing.

4. Denial of Rectification Application Under Section 74 of the TVAT Act:

The petitioner claimed that the Assessing Officer failed to exercise the power of rectification despite strong grounds. The court found it unnecessary to examine the legality of the rectification order since the assessment order itself was quashed due to inadequate hearing.

5. Request for Virtual Hearing Due to COVID-19:

The petitioner requested a virtual hearing due to the high number of COVID-19 cases, especially in Kolkata where the petitioner’s Head Office is located. The Assessing Officer did not grant this request. The court criticized the department’s insistence on physical appearance during the pandemic, highlighting that courts across the country operated virtually. The court permitted virtual hearings, considering the petitioner’s Head Office location and the potential risks and delays associated with physical hearings.

Conclusion:

The court set aside the impugned order dated 26.02.2021 and the order rejecting the petitioner’s rectification application. The assessment proceedings were revived and restored to the Assessing Officer’s file. The court directed that the hearing take place on 8th November 2021 at 11 am through virtual mode, with the petitioner’s representative creating a link and communicating it to the Assessing Officer. The fresh assessment must be framed by 28th February 2022, with no limitation issues arising. All contentions of the petitioner were kept open, and the petition was disposed of accordingly.

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