2022 (3) TMI 688 - HC - VAT and Sales Tax

Validity of assessment order - service of demand notice - violation of principles of natural justice - Section 25(1) of the Kerala Value Added Tax Act, 2003 - HELD THAT - Apparently, from the address shown in the orders of assessment, issued against the petitioner, it is evident that the notice was not been send to the correct address of the petitioner. Similarly, the e-mail address to which the notice is supposed to have been send, is stated by the counsel for the petitioner as the e-mail ID of an earlier employee, who had left the services of the petitioner even before the reassessment proposal was issued. The veracity or otherwise of the notice through e-mail is not being probed at this juncture, having regard to the nature of the order that is proposed to pass in the instant case. Indisputably, the hard copy of the notice issued by registered post to the petitioner was send not to the changed address maintained in the register of the tax authorities, but only to the prior address. After the address particulars of the petitioner was corrected, as is seen from Ext.P2 registration certificate, the assessing officer ought to have issued the notice to the correct address - the petitioner is justified in contending that the impugned orders are issued in violation of the principles of natural justice for non service of notice. Since the assessment orders relate to the years 2017- 18, it is necessary that the assessing officer be directed to complete the assessments against the petitioner, as expeditiously as possible - the assessing officer is directed to grant a fresh opportunity to the petitioner to file their objections to the proposal for reassessment and pass appropriate orders after granting an opportunity of hearing, within a period of three months from the date of receipt of a copy of this judgement - petition allowed.

Summary

Issues:
Violation of principles of natural justice in assessment orders under KVAT and CST for the assessment year 2017-18.

Analysis:
The petitioner challenged two assessment orders dated 29.04.2021 under the Kerala Value Added Tax Act, 2003 (KVAT) and the Central Sales Tax Act, 1956 (CST) for the assessment year 2017-18. The main contention raised was the violation of the principles of natural justice due to the alleged non-service of notice before the assessment orders were issued. The petitioner argued that the reassessment proposal was sent to an incorrect address despite the correct address being available with the assessing officer.

The Government Pleader contended that notices were issued to the address available with the assessing officer and that sufficient opportunity was granted to the petitioner. It was argued that the failure of the petitioner to appear when an opportunity for hearing was granted does not amount to a violation of the principles of natural justice.

The court found that the petitioner had submitted an application for a change of correspondence address for all letters/notices for future in respect of VAT/CST, which was received by the officer. The change of address was presumed to be brought to the notice of the assessing officer and was available with him. However, the assessment order was dispatched to the earlier address of the petitioner, not the corrected address maintained with the respondent. The court concluded that the petitioner was justified in contending that the assessment orders were issued in violation of the principles of natural justice due to non-service of notice.

Consequently, the court set aside the assessment orders under KVAT and CST and directed the assessing officer to complete the assessments against the petitioner expeditiously. The assessing officer was instructed to grant a fresh opportunity to the petitioner to file objections to the proposal for reassessment and pass appropriate orders after granting an opportunity of hearing within a specified timeframe.

In conclusion, the writ petition was allowed, and the assessment orders were set aside due to the violation of the principles of natural justice in the non-service of notice, leading to the direction for a fresh opportunity for the petitioner to participate in the assessment process.