2023 (4) TMI 162 - HC - VAT and Sales Tax

Validity of reassessment Orders - primary grievance is that the impugned reassessment orders are without a fair and complete opportunity - violation of principles of natural justice - HELD THAT - The petitioner on receipt of the photocopies of the documents has made a request for further time citing third party information and the volume of the documents as reasons. This request is admittedly made on 27.02.2023 i.e., before the expiry of the time allowed by the endorsement dated 17.02.2023. But the same is not received, as canvassed on behalf of the petitioner, on the ground that separate requests had to be made. The petitioner has persisted with its request for further time by filing a further request on 28.02.2023. In fact, the petitioner's case is that its representative was present with the respondent's office both on 27.02.2023 and 28.02.2023 and the request is received at the fag end of the second day. There could be failure by the petitioner to respond immediately to the Call Notices or the Proposition Notices, but for the purposes of the present case, it would not decisive especially when the petitioner is furnished with the copies of the documents on 17.02.2023. If the petitioner has been given photocopies of the documents including the statement of third parties on 17.02.2023 and the documents are third party documents and voluminous, this Court is of the considered view that the request on 27.02.2023 for further time of course, with the statutory constraints in mind should have been considered. There must be interference with the impugned assessment orders with the proceedings being restored to the respondent for conclusion of the assessment proceedings with opportunity to the petitioner to file detailed objections with a request for cross examination of the witnesses to be considered by the respondent, if permitted in law. The impugned reassessment orders for the tax periods viz., April 2015 to March 2016, April 2016 to March 2017 and April 2017 to June 2017, which are produced as Annexure-A in each of the writ petitions, are quashed and the corresponding proceedings are restored to the respondent for reconsideration - Petition allowed.

Summary

Issues involved:
The judgment involves the impugning of reassessment orders under the Karnataka Value Added Tax Act, 2003 for different tax periods, alleging lack of fair opportunity.

Details of the judgment:

Issue 1: Lack of fair opportunity
The petitioner challenged the reassessment orders for various tax periods, claiming they were issued without a fair and complete opportunity. The petitioner's primary grievance was that the orders lacked a fair opportunity for response. The respondent had issued Call Notices for production of books of accounts, and later Proposition Notices proposing demands for the tax periods. Despite the petitioner's responses and requests for further time, the reassessment orders were passed on the grounds of non-compliance with detailed replies. The petitioner contended that denial of a fair opportunity violated principles of natural justice and requested reconsideration with proper opportunity to respond.

Issue 2: Cross-examination rights
The petitioner argued that as the assessment was based on information from a third party, they should have been allowed to cross-examine the persons whose statements were relied upon. The petitioner asserted that without this opportunity, the assessments were flawed. They sought intervention to restore proceedings for reconsideration with the chance to file detailed responses and cross-examine relevant witnesses.

Issue 3: Conduct of the petitioner
The respondent highlighted the petitioner's conduct, suggesting an intent to delay proceedings. Despite opportunities to respond and inspect documents, the petitioner failed to file timely responses. The respondent extended deadlines for detailed replies after providing photocopies of relevant documents. The respondent emphasized the petitioner's delays and lack of immediate responses to notices, indicating an attempt to protract the proceedings.

Judgment Outcome:
The court considered the submissions and facts, acknowledging the petitioner's requests for additional time and the challenges posed by voluminous third-party documents. It found that the petitioner's requests for further time should have been considered, especially given the circumstances. The court concluded that the impugned assessment orders lacked proper consideration of the petitioner's requests and ordered the reassessment orders to be quashed. The proceedings were restored to the respondent for reconsideration, allowing the petitioner to file detailed responses and potentially cross-examine witnesses. The court left all contentions open for future consideration, including any grounds related to limitation, depending on further proceedings.