2025 (1) TMI 1147 - HC - VAT / Sales Tax

Challenge to impugned assessment order as well as the rectification order - rejection of rectification application on the ground that there was no apparent mistake on the record and the grounds in the Rectification Application were actually the grounds of Appeal and not grounds for Rectification - HELD THAT - In the facts of the present case it is not in dispute that for the assessment year 2015-16 a show cause notice was issued to the Petitioner on 12th March 2020 fixing a hearing of the case on 23rd March 2020. It is also not in dispute that by 23rd March 2020 due to the Covid-19 pandemic the entire country was under lock-down. Once this is the case it was impossible for the Petitioner to attend the hearing that was fixed on 23rd March 2020. Despite this Respondent No.3 has proceeded ahead and passed the impugned assessment order. Looking at the peculiar facts of the present case we have no hesitation in holding that the assessment order has been passed in complete breach of the principles of natural justice. There are considerable force in the arguments canvassed on behalf of the Petitioner that the impugned assessment order be set aside and the matter be remanded back to the 3rd Respondent for re-adjudicating the show cause notice dated 12th March 2020 after the Petitioner is given an opportunity to file a reply to the show cause notice as well as a personal hearing in the matter. Conclusion - The assessment order has been passed in complete breach of the principles of natural justice. Matter remanded back to Respondent No.3 for re-adjudication. Petition disposed off by way of remand.

ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Court was whether the assessment order dated 26th March 2020 and the subsequent rectification order dated 10th November 2020, both issued by Respondent No.3 under the Maharashtra Value Added Tax Act, 2002 (MVAT Act, 2002), should be quashed and set aside due to a breach of natural justice principles. Specifically, the Court examined whether the Petitioner was denied a fair opportunity to respond to a show cause notice issued during the national lockdown due to the Covid-19 pandemic.

ISSUE-WISE DETAILED ANALYSIS

1. Breach of Natural Justice Due to Lockdown

Relevant legal framework and precedents: The principles of natural justice require that a party must be given a fair opportunity to present their case. This includes adequate notice and the opportunity to be heard before an adverse decision is made. Under the MVAT Act, 2002, Section 23(2) pertains to the issuance of assessment orders, while Section 24 allows for rectification of apparent mistakes.

Court's interpretation and reasoning: The Court recognized that the Petitioner was unable to attend the hearing scheduled for 23rd March 2020 due to the national lockdown imposed because of the Covid-19 pandemic. The Court noted that the assessment order was passed on 26th March 2020 without the Petitioner being able to present their case, which constituted a breach of natural justice.

Key evidence and findings: The Petitioner had attended prior hearings and submitted documents on several occasions. However, the final hearing set for 23rd March 2020 could not be attended due to the lockdown. The Respondents did not provide any alternative means for the Petitioner to present their case during this period.

Application of law to facts: The Court applied the principles of natural justice to the facts, concluding that the Petitioner was denied a fair hearing due to circumstances beyond their control. The lockdown made it impossible for the Petitioner to respond to the show cause notice, and the subsequent assessment order was therefore unjust.

Treatment of competing arguments: The Respondents argued that the Petitioner had the opportunity to appeal the assessment order and that the rectification application was rightly dismissed as it did not reveal any apparent mistake. However, the Court found that the lack of a hearing due to the lockdown was a significant procedural lapse that warranted setting aside the assessment order.

Conclusions: The Court concluded that the assessment order was passed in violation of natural justice principles and should be quashed. The matter was remanded to Respondent No.3 for re-adjudication with an opportunity for the Petitioner to respond and be heard.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Court stated, "Looking at the peculiar facts of the present case we have no hesitation in holding that the assessment order has been passed in complete breach of the principles of natural justice."

Core principles established: The judgment reinforced the principle that procedural fairness and the opportunity to be heard are fundamental rights that must be upheld, even in extraordinary circumstances such as a national lockdown.

Final determinations on each issue: The Court quashed the impugned assessment order dated 26th March 2020 and remanded the matter back to Respondent No.3 for re-adjudication. The Petitioner was directed to file a reply to the show cause notice within two weeks of the order being uploaded, and Respondent No.3 was instructed to provide a personal hearing before passing a fresh assessment order.

The Court clarified that it had not opined on the merits of the case, leaving all contentions open for consideration by Respondent No.3 in accordance with the law. The rule was made absolute, and the writ petition was disposed of with no order as to costs.

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