Court quashes assessment order for violating natural justice and sales tax rules

The Court allowed the writ petition, quashing the provisional assessment order due to violations of natural justice and rule 12 of the Andhra Pradesh General Sales Tax Rules. The Court emphasized the necessity of providing a fair opportunity for the dealer to prove the correctness of the return before issuing a provisional assessment. No costs were imposed on the petitioner, and the assessing authority was directed to conduct a fresh assessment in compliance with rule 12.

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Issues:
Challenge to validity of provisional assessment order based on violation of natural justice and rule 12 of Andhra Pradesh General Sales Tax Rules, 1957.

Analysis:
The petitioner, a public limited company engaged in works contracts, challenged the validity of a provisional assessment order dated February 5, 1996, as it was deemed violative of natural justice principles and rule 12 of the Andhra Pradesh General Sales Tax Rules, 1957. The assessing authority, not satisfied with the petitioner's returns, issued a demand notice for Rs. 77,08,174 based on a provisional assessment. The petitioner contended that the order should be quashed due to the lack of opportunity to prove the correctness of the return, as mandated by rule 12. The Government Pleader argued that the petitioner had the right to appeal the provisional assessment order. The Court clarified that the existence of an alternative remedy does not bar the jurisdiction under Article 226 of the Constitution, especially in cases of natural justice violations and rule 12 breaches.

The Court highlighted that rule 12 of the Andhra Pradesh General Sales Tax Rules requires the assessing authority to provide a reasonable opportunity for the dealer to prove the correctness of the return if it appears to be incorrect. In this case, the assessing authority did not comply with the requirements of rule 12, as the petitioner was not given a fair opportunity before the provisional assessment order was passed. The Court emphasized that denial of natural justice and violation of rule 12 warranted relief through a writ petition, even if an alternative remedy was available. The Court directed the quashing of the impugned provisional assessment order, allowing the assessing authority to conduct a fresh assessment following the procedure laid down in rule 12.

In conclusion, the writ petition was allowed, and no costs were imposed on the petitioner. The Court's decision to quash the provisional assessment order was based on the failure to adhere to the principles of natural justice and the provisions of rule 12 of the Andhra Pradesh General Sales Tax Rules, emphasizing the importance of providing a reasonable opportunity to the dealer to prove the correctness of the return before making a provisional assessment.

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