2022 (3) TMI 223 - HC - VAT and Sales Tax

Violation of principles of natural justice - Validity of the reassessment order - sufficient opportunity has been granted for production of books or not - Section 39(1) of the Karnataka Value Added Tax Act, 2013 - HELD THAT - It is to be noted that adherence to principles of natural justice in the proceedings prior to issuance of show cause notice would not take away the right of the petitioner to claim availing of the opportunity of personal hearing in the proceedings post issuance of show cause notice. In light of the request of the petitioner for affording an opportunity of personal hearing as per the reply at Annexure-D, assessment order passed without affording an opportunity of personal hearing is in violation of the principle of natural justice and therefore, the impugned assessment order is liable to be set aside. The matter is remanded back for reconsideration by respondent No.3 from the stage of receipt of reply to the proposition notice. The opportunity of personal hearing as requested is to be afforded - re-assessment order is set aside - petition allowed by way of remand.

Summary

Issues: Validity of reassessment order under Section 39(1) of the Karnataka Value Added Tax Act, 2013 for the period 2017-18; Validity of demand notice; Affording personal hearing before passing orders.

The judgment concerns the validity of a reassessment order issued under Section 39(1) of the Karnataka Value Added Tax Act, 2013 for the period 2017-18, as well as the validity of the accompanying demand notice. The petitioner challenged the order and sought relief in the form of a writ of mandamus to grant a personal hearing before passing further orders. The petitioner contended that despite submitting a detailed reply to a proposition notice and requesting a personal hearing, the authority passed the order without affording this opportunity. On the other hand, the Additional Government Advocate argued that sufficient opportunities were provided for the production of books, maintaining that the principles of natural justice were followed.

The court emphasized that while the principles of natural justice were adhered to in the proceedings before the issuance of the show cause notice, the petitioner still had the right to request a personal hearing post-issuance of the notice. Given the petitioner's request for a personal hearing in the reply to the notice, the assessment order passed without granting this opportunity was deemed a violation of natural justice. Consequently, the court set aside the reassessment order and the demand notice, remanding the matter back to the respondent for reconsideration from the stage of receiving the reply to the proposition notice, with instructions to afford the requested personal hearing.

As a result of the judgment, the reassessment order and demand notice were both set aside, and the petitioner was directed to appear before the respondent without waiting for a fresh notice. The court mandated that the proceedings be concluded within ten weeks from the petitioner's appearance, thereby disposing of the writ petition accordingly.