2016 (3) TMI 699 - HC - VAT and Sales Tax

High Court quashes orders, remits matter for fresh consideration, directs hearing for petitioner

The High Court allowed the petition, quashed the impugned orders, and remitted the matter to the Assessing Authority for fresh consideration. The Court ... Opportunity of hearing - quashing and remand for fresh consideration - assessment proceedings under the Karnataka Value Added Tax and Central Sales Tax Acts - consideration of objections and material before assessmentOpportunity of hearing - consideration of objections and material before assessment - Assessment orders were passed without giving the petitioner adequate opportunity to be heard and without considering the specific objections and material placed by the petitioner. - HELD THAT: - The Court found that the assessing authority proceeded to pass assessment orders after issuing notices and endorsements but overlooked or did not take into account the detailed objections, explanations and materials furnished by the petitioner. The petitioner had specifically highlighted that the original notice did not state the grounds on which the assessment was ultimately made and that cumulative figures were wrongly adopted without appreciating the filings in statutory returns. In view of the omission to afford a proper hearing and to consider the pointed material and objections, the Court concluded that the assessment was vitiated for want of compliance with the requirement of fair hearing. [Paras 7, 9]Impugned assessment orders quashed for failure to afford adequate opportunity of hearing and failure to consider the petitioner's objections and material.Quashing and remand for fresh consideration - assessment proceedings under the Karnataka Value Added Tax and Central Sales Tax Acts - The matters were remitted to the assessing authority for fresh consideration after affording the petitioner an opportunity of hearing and considering the material pointed out by the petitioner. - HELD THAT: - Having quashed the impugned orders, the Court directed that the assessing authority shall re-examine the matter and decide afresh in accordance with law after giving the petitioner an opportunity to make submissions and produce relevant material. The Court recorded that the Government Advocate conceded that if an opportunity had not been given on several aspects, the petitioner should be permitted to make submissions. The remand is for fresh adjudication and consideration of the petitioner's contentions, not for the Court itself to re-assess the substantive tax questions. [Paras 9]Matter remitted to the assessing authority for fresh consideration after affording opportunity of hearing; petitioner to appear before the respondent on 10.3.2016 and implead the State of Karnataka as party.Final Conclusion: Petition allowed; impugned assessment orders quashed and matter remitted to the assessing authority for fresh consideration after giving the petitioner an opportunity of hearing and considering the materials pointed out; administrative directions given for appearance and impleadment. Issues:Assessment of tax liability under the Karnataka Value Added Tax Act and the Central Sales Tax Act for a government undertaking engaged in construction and engineering consultancy services.Analysis:The petitioner, a government undertaking engaged in construction and engineering consultancy services, claimed exemption under the Karnataka Value Added Tax Act and the Central Sales Tax Act for the assessment year 2009-10. The petitioner had executed a contract for a project involving various services for a specific company. The petitioner had carried out interstate sales supported by statutory certificates in Form C and E1, disclosing a substantial turnover. However, notices were issued by the Joint Commissioner of Commercial Tax, followed by the respondent, questioning the methodology of contract execution and proposing tax levies on the petitioner's turnover.The petitioner responded to the notices, explaining the execution methodology and challenging the proposed tax levies. Despite the petitioner's submissions, the respondent issued further notices proposing tax levies and disallowing claims of transit sales. The petitioner objected to the notices, pointing out errors in the assessment and seeking additional time to provide detailed objections. However, the respondent proceeded with the assessment without further intimation, leading the petitioner to file a petition before the High Court.The High Court noted that the assessment order lacked detailed grounds and overruled the petitioner's objections without proper consideration. The Court emphasized the importance of providing an opportunity for a hearing to the petitioner on all aspects of the matter before passing the assessment order. The Government Pleader, while objecting to the petitioner's claims, conceded that the petitioner should be given an opportunity for a hearing on various aspects of the matter.Consequently, the High Court allowed the petition, quashed the impugned orders, and remitted the matter to the Assessing Authority for fresh consideration. The Court directed the Assessing Authority to provide a hearing to the petitioner and consider all relevant material before making further decisions in accordance with the law. The petitioner was instructed to appear before the respondent without further notice, and the State of Karnataka was to be impleaded as a party. The Government Advocate was directed to file a memo of appearance within two weeks.