2018 (1) TMI 1316 - HC - VAT and Sales Tax

Court quashes tax assessment orders, citing lack of opportunity and natural justice

Alstom Bharat Forge Power Pvt. Ltd Versus The State of Bihar and Others

The court found that the assessment orders for the financial years 2014-15 and 2015-16 were passed without granting the petitioner adequate opportunity of ... Validity of assessment order - adequate opportunity of hearing - sufficient opportunity to produce Form-C certificate - It is claimed that the petitioner is not liable to pay sales tax on high seas sales in view of Section 5 of the Central Sales Tax Act, 1956 (hereinafter referred to as CST Act) read with Article 286 of the Constitution of India so also in view of Section 6 of BVAT Act. That apart, for the indigenous sales the petitioner claimed exemption under Section 3(b) read with Section 6(2) of the CST Act. Held that:- Taking into account all aspect of the matter, we are of the considered view that it is a fit case where instead of relegating the petitioner to take recourse to the statutory alternative remedy interest of justice would be made if it is remitted to the Assessing Officer with a direction to proceed with the assessment afresh in accordance with law. - Matter remanded back. Issues Involved:1. Adequate opportunity of hearing.2. Consideration of relevant documents.3. Violation of principles of natural justice.4. Availability of alternative statutory remedy.Detailed Analysis:1. Adequate Opportunity of Hearing:The petitioner-assessee argued that the impugned assessment orders for the financial years 2014-15 and 2015-16 were passed without granting them adequate and reasonable opportunity of hearing. Despite appearing before the authorities on specified dates and requesting time to produce Form-C certificates, the orders were passed without considering these requests. The court found that specific averments made by the petitioner regarding the proceedings held on 07.02.2017 and 18.02.2017 were not denied or rebutted by the respondents, leading to the conclusion that adequate opportunity was not provided.2. Consideration of Relevant Documents:The petitioner contended that documents related to high sea sales and inter-state sales were produced during the proceedings, but the Assessing Officer did not consider these documents. The court noted that the Haziri (attendance) records and affidavits submitted by the petitioner's representatives indicated that relevant documents were indeed presented, and requests for additional time to produce further documents were made. The court observed that the impugned orders did not reflect these submissions accurately, indicating a failure to consider the provided documents.3. Violation of Principles of Natural Justice:The court emphasized that the principles of natural justice were violated as the petitioner was not given a fair opportunity to present all relevant documents, particularly the Form-C certificates. The court referenced the Supreme Court’s rulings in Whirlpool Corpn. vs. Registrar of Trade Marks and A B L International Limited vs. Export Credit Corpn., which held that violation of natural justice principles warrants interference under Article 226 of the Constitution.4. Availability of Alternative Statutory Remedy:The respondents argued that the petitioner should be directed to the alternative statutory remedy available under the BVAT Act. However, the court held that when an order is passed in violation of the principles of natural justice, the existence of an alternative remedy does not preclude the exercise of writ jurisdiction. The court cited the Supreme Court’s decisions in State of H.P. vs. Gujarat Ambuja Cement Ltd. and other cases to support this view.Conclusion:The court concluded that the assessment orders were passed without granting adequate opportunity to the petitioner and without considering the relevant documents, thus violating the principles of natural justice. Consequently, the court quashed the impugned orders and directed the Assessing Officer to conduct a fresh assessment. The petitioner was instructed to appear before the Assessing Officer with all relevant documents on 6th March 2018, and the officer was directed to proceed with the assessment in accordance with law, ensuring that the petitioner is given a fair opportunity to present their case. The court did not delve into the merits of the liability to pay duties, leaving it to the Assessing Officer to decide based on the law.