1999 (3) TMI 596 - HC - VAT and Sales Tax

Court overturns penalty order due to lack of hearing post petitioner's detailed reply

Chittur Perfume Oil Industries Versus Intelligence Officer, Squad No. III, Agricultural Income-tax and Sales Tax, Palakkad and Others

The court found a violation of natural justice in failing to grant a requested hearing after the petitioner submitted a detailed reply (exhibit P4) in a ... - Issues:Challenge to penalty order under section 45-A of the Kerala General Sales Tax Act, 1963 - Violation of principles of natural justice - Opportunity of hearing - Revisional authorities' orders.Analysis:1. The petitioner, a partnership firm engaged in the manufacture of sandalwood oil, challenged the penalty imposed under section 45-A of the Act, confirmed in revision orders P7 and P9. The penalty arose due to slips found during inspection. The petitioner requested copies of the slips to provide an effective reply, which was granted. Despite submitting a detailed reply in exhibit P4, the penalty order (P5) was passed without a further opportunity of hearing. The petitioner contended that section 45-A mandates an opportunity of hearing before imposing a penalty, as it is penal in nature, and principles of natural justice require a hearing.2. The Government Pleader argued that a hearing was granted on June 13, 1994, where the petitioner explained the matter. All explanations were considered, and authorities found against the petitioner. The key issue is whether there was a violation of natural justice and if such violation in revisional orders can be cured. The petitioner did not raise the absence of a hearing in the revision petition. The authorities had considered all points raised, and the orders need not be set aside as an effective opportunity was provided.3. It is undisputed that the petitioner was heard on June 13, 1994, and provided with photocopies of the slips to explain further. The petitioner requested a full opportunity of hearing after giving explanations but was not granted. The court held that the failure to afford a requested hearing after submitting exhibit P4 reply violated natural justice, crucial for penal orders. The court ordered a fresh hearing for the petitioner, setting aside orders P5, P7, and P9. The original authority must hear the petitioner again and pass fresh orders within two months. Penalty adjustment is to be made only after the new order.In conclusion, the court found a violation of natural justice in not providing a requested hearing post exhibit P4 reply, necessitating a fresh hearing and order. The judgment highlights the importance of procedural fairness in penalty proceedings under section 45-A of the Act.