2020 (1) TMI 1515 - HC - VAT and Sales Tax

Judgment sets aside VAT assessment for failure to consider objections, emphasizes need for reasoned decisions

The Court allowed the Writ Petition, setting aside the assessment order for VAT for the years 2015-16 and 2016-17 due to the assessing authority's failure ... Validity of assessment order - non- application of mind by the 1st respondent to the explanation/objections filed by the petitioner and to the supporting material filed by the petitioner - principles of natural justice - HELD THAT:- Though a counter affidavit is filed justifying the passing of the order by the 1st respondent, it is a settled law that an order passed by a Statutory Authority must contain the reasons for the conclusions in the said order, and the said order cannot be supported by reasons given in an affidavit filed in the Court where the said order is challenged, as held by the Supreme Court in MOHINDER SINGH GILL & ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI & ORS. [1977 (12) TMI 138 - SUPREME COURT]. This legal position is not disputed by the learned Government Pleader for Commercial Taxes. The Writ Petition is allowed - the impugned order dt.20.04.2017 passed by the 1st respondent is set aside and the 1st respondent is directed to consider not only the reply filed by the petitioner on 18.01.2017, but all annexures filed to the said reply, give a personal hearing to the petitioner and pass a fresh order in accordance with law within a period of six (6) weeks. Issues:Challenge to assessment order for VAT for the years 2015-16 and 2016-17; Non-application of mind by the assessing authority; Lack of consideration of petitioner's objections and supporting documents; Legal requirement of reasons in orders by Statutory Authorities.Analysis:The petitioner challenged the assessment order passed by the 1st respondent for the assessment of VAT for the years 2015-16 and 2016-17. The petitioner contended that the assessing authority did not consider the detailed objections and supporting material submitted by them. The petitioner specifically mentioned being a supplier to DRDO and disputed the proposed VAT rate. However, the impugned order did not address these points, confirming the tax demand. The counsel for the petitioner argued that there was a total non-application of mind by the assessing authority to the petitioner's explanation and supporting material, a contention with which the Court agreed.The Court highlighted the legal requirement that orders by Statutory Authorities must contain reasons for their conclusions. It was emphasized that such orders cannot be supported by reasons given in an affidavit filed in court. Citing the Supreme Court's decision in Mohinder Singh Gill v. Chief Election Commissioner, the Court reiterated this principle. The learned Government Pleader for Commercial Taxes did not dispute this legal position. Consequently, the Court allowed the Writ Petition, setting aside the impugned order and directing the 1st respondent to reconsider the petitioner's reply, along with all annexures, provide a personal hearing, and issue a fresh order within six weeks in compliance with the law.In conclusion, the Court's decision emphasized the importance of statutory authorities providing reasons for their orders and considering all relevant submissions and supporting documents. The judgment underscored the need for a fair and reasoned decision-making process, ensuring that parties are given a proper opportunity to present their case and have their objections addressed in accordance with the law.