2015 (3) TMI 1189 - HC - VAT and Sales Tax

Tax Assessment Time Limit Violation Upheld; Emphasizes Fair Treatment & Due Process

The High Court held that denying sufficient time to furnish required forms under the Central Sales Tax Act, 1956, violated natural justice principles as ... Non-submission of all statutory Form-'C' on the basis of which the appellant claims payment of concessional tax - Violation of principles of natural justice - appellant was not given adequate opportunity nor was given opportunity of personal hearing - appellant paying tax to the tune of several crores regularly - Held that:- from the facts and circumstances of the case, we are of the firm opinion that fair and reasonable opportunity was not given to the appellant to furnish the balance statutory forms as time prayed for was denied without recording reasons or considering the reply of the appellant. The same was thus in clear violation of the principles of natural justice. As such, the finding recorded by the Writ Court that a week's opportunity was sufficient and also that the appellant had an alternate remedy of filing appeal, cannot be justified in law. The dismissal of the writ petitions was thus not warranted in the facts of the present case. Therefore, the appellant is directed to furnish the requisite statutory Form -'C' with the Assessing Authority within two months i.e., on or before 20.05.2015 and avail the benefit of concessional tax. - Decided in favour of petitioner Issues:- Adequacy of opportunity given to the appellant- Consideration of reasons for further time request- Violation of principles of natural justiceAdequacy of Opportunity:The dispute in the case revolved around the assessment period under the Central Sales Tax Act, 1956. The appellant, engaged in the business of electrical/electronic products, faced a tax liability issue due to non-submission of all required Form-'C'. The appellant requested additional time to furnish the forms, citing difficulties in collecting them from customers across multiple states. Despite the appellant's detailed response explaining the challenges faced, the Assessing Authority granted only a week's extension, ignoring the reasons provided. The High Court held that denying sufficient time to furnish the forms amounted to a violation of natural justice principles as the Assessing Authority failed to consider the appellant's difficulties adequately.Consideration of Reasons for Time Request:The High Court emphasized that the Assessing Authority's discretion to extend time for submitting Form-'C' should be exercised judiciously. The court noted that the Authority did not consider the appellant's reasons for requesting additional time, leading to the denial of a fair opportunity. Referring to a previous case, the court highlighted that the provision requiring filing of declaration forms should be seen as directory, not mandatory. Therefore, the failure to consider the appellant's reply and grant further time without justification was deemed unjustifiable.Violation of Principles of Natural Justice:The court found that the Writ Court's dismissal of the appellant's petitions based on the one-week extension granted by the Assessing Authority was erroneous. It concluded that the appellant was not afforded a fair and reasonable opportunity to furnish the required forms, as the requested time was denied without proper consideration of the appellant's response. Consequently, the dismissal of the writ petitions was deemed unjustified, leading to the allowance of the appeals and quashing of the assessment order. The court directed the appellant to submit the necessary Form-'C' within a specified timeframe to avail of concessional tax benefits, emphasizing the importance of upholding natural justice principles in such matters.Conclusion:The judgment highlighted the significance of providing adequate opportunity to parties in tax assessment matters, stressing the need for authorities to consider and address the challenges faced by taxpayers. By overturning the assessment order due to procedural deficiencies and violation of natural justice principles, the High Court underscored the importance of fair treatment and due process in administrative proceedings related to tax liabilities.