2022 (3) TMI 224 - HC - VAT and Sales Tax

Validity of assessment order - impugned order having allegedly been rendered, without any hearing - opportunity of hearing was not granted to the petitioner - violation of principles of natural justice - HELD THAT - An assessment order issued under section 25(1) of the KVAT Act is impugned in this writ petition. The jurisdiction of the High Court to interfere in matters relating to assessment of tax arises only when there is an infringement of fundamental rights or when the taxing authorities have assumed a jurisdiction not vested in it or when there is a violation of the principles of natural justice or when there is a challenge to the vires of the Statute. A perusal of the notices issued by the respondent as Ext.P2 and Ext.P5 reveals that the latter of the notices dated 05.01.2021 was for a different amount and therefore the petitioner ought to have replied to the specific allegations mentioned in the said notice dated 05.01.2021. Failure to consider the reply dated 08.05.2018, is, therefore, not material, since the officer had, subsequent to the original notice, issued a fresh notice within the period of limitation raising a different set of allegations - failure to consider Ext.P3 reply given by the petitioner, while issuing Ext.P11 order of assessment, does not vitiate the assessment order. The petitioner was granted sufficient opportunity to contest the assessment proceedings and his failure to do so cannot be regarded as a violation of the principles of natural justice to invoke the discretionary jurisdiction of this Court under Article 226 of the Constitution - the writ petition stands dismissed.

Summary

Issues:
Assessment order under the Kerala Value Added Tax Act, 2003 challenged for lack of hearing and jurisdiction, violation of natural justice principles, and failure to consider replies.

Analysis:
1. The petitioner, a public limited company, contested an assessment order for the assessment year 2016-17 under the KVAT Act, alleging it was issued without a proper hearing and jurisdiction, violating natural justice principles. The petitioner claimed that despite replying to a notice under section 25(1) of the KVAT Act, subsequent communications were received proposing a significantly higher total escaped turnover, leading to confusion and lack of clarity in the proceedings.

2. The petitioner requested additional time and opportunities for hearing after receiving subsequent notices with increased proposed turnovers. The respondent adjourned proceedings multiple times in response to the petitioner's requests for more time to gather information due to operational challenges caused by the Covid-19 pandemic. The petitioner argued that the adjournments were necessary to ensure a fair opportunity to respond adequately.

3. The learned counsel for the petitioner argued that the lack of sufficient opportunity caused prejudice to the petitioner, emphasizing the difficulties faced in collating data for responses due to the centralization of tax matters at the corporate office. On the other hand, the Senior Government Pleader contended that repeated opportunities were granted to the petitioner, and the failure to utilize these opportunities led to the assessment order in question.

4. The High Court analyzed the contentions of both parties and referred to legal precedents to determine its jurisdiction to interfere in tax assessment matters. The Court emphasized that intervention is warranted only in cases of fundamental rights infringement, jurisdictional overreach, violation of natural justice, or statutory challenges. The Court noted that subsequent notices with different allegations necessitated specific responses, and failure to consider earlier replies did not invalidate the assessment order.

5. The Court examined the communications between the parties, highlighting that the petitioner was granted multiple opportunities to object to the assessment notice but failed to respond effectively despite repeated adjournments. The Court concluded that the petitioner had been given sufficient chances to contest the assessment proceedings, and the failure to do so did not amount to a breach of natural justice principles.

6. Consequently, the High Court dismissed the writ petition while preserving the petitioner's right to pursue statutory remedies. The Court clarified that any further remedies invoked by the petitioner would be considered in accordance with the law, ensuring the petitioner's legal options remain unaffected by the judgment.