Limitation and natural justice in revisional tax proceedings: ex parte order set aside and matter remitted for fresh hearing.

Revisional proceedings under section 15B were held to be within the prescribed three-year limitation because the relevant records were called for and the revisional order was passed before expiry of time. However, the revisional order was set aside for breach of natural justice, as it had been passed ex parte without giving the assessee a fair and effective opportunity to file objections and be heard. The matter was remitted for fresh consideration on merits, leaving the questions of levy and classification open for reconsideration by the revisional authority.

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Issues: (i) Whether the revisional proceedings were barred by limitation under section 15B of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979. (ii) Whether the revisional order, having been passed ex parte without effective opportunity, was liable to be set aside and the matter remitted for fresh consideration.

Issue (i): Whether the revisional proceedings were barred by limitation under section 15B of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979.

Analysis: The relevant revisional records were called for within the statutory period, and the order of revision was passed before expiry of the three-year period computed from the date from which limitation began to run. The chronology showed that the revisional authority acted within the prescribed time.

Conclusion: The revisional proceedings were not barred by limitation and this issue was decided against the assessee.

Issue (ii): Whether the revisional order, having been passed ex parte without effective opportunity, was liable to be set aside and the matter remitted for fresh consideration.

Analysis: The revisional authority proceeded on an erroneous factual basis regarding production of records and, more importantly, disposed of the revision ex parte after granting time once, without effective compliance or meaningful opportunity to the assessee to substantiate objections. In these circumstances, the order did not satisfy the requirements of fair hearing and natural justice. The substantive questions on levy and classification were therefore left open to be considered afresh by the revisional authority.

Conclusion: The revisional order was liable to be set aside and the matter remitted for fresh orders, with opportunity to the assessee to file objections and be heard.

Final Conclusion: The revision was held to be maintainable and within time, but the impugned revisional order was set aside for breach of natural justice and the matter sent back for fresh decision on merits.

Ratio Decidendi: A revisional order passed within limitation may still be set aside if it is made ex parte without affording a fair and effective opportunity of hearing, and the matter may be remitted for fresh adjudication.

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