2016 (8) TMI 523 - HC - VAT and Sales Tax

Court rejects challenge to tax assessment under Section 25(1) of KVAT Act, 2003, emphasizes factual adjudication

M/s. SONA ENTERPRISES Versus THE COMMERCIAL TAX OFFICER, THE DEPUTY TAHSILDAR (. R.R)

The Court declined to interfere with the tax assessment challenge under Section 25(1) of the KVAT Act, 2003 for the year 2009-10, emphasizing the need for ... Valuation of closing stock – Enquiry – sales suppression and closing stock at the time of closure of business is assessable under KVAT Act, 2003 - adjudication of the court – opportunity of heard provided – Held that: - Whether this approach of the assessing officer is justifiable under the circumstances of the case and whether the objections submitted could have been further inquired into are all matters which requires an adjudication of facts, which cannot be adjudicated by this Court in the proceedings under Article 226 of the Constitution. Whether the particulars provided by the petitioner in their objection was sufficient enough to consider their defence and to arrive at a finding are all matters which could be considered by the appellate authority in a proper manner. No violation of principles of natural justice – right of petitioner to appeal reserved – writ petition closed. Issues:Challenge to tax assessment under Section 25(1) of the KVAT Act, 2003 for the year 2009-10. Compliance with direction from appellate authority regarding stock assessment. Allegation of violation of principles of natural justice.Analysis:1. The petitioner contested the tax assessment under Section 25(1) of the KVAT Act, 2003 for the year 2009-10, challenging the Ext.P5 order passed by the Commercial Tax Officer. The main dispute revolved around the closing stock, specifically 37751.570 grams of gold held by the Managing Partner during office renovation, which was not adequately considered by the assessing authority.2. The appellate authority directed the assessing authority to conduct a thorough inquiry into the stock submitted by the appellant due to disputed status and place of stock and alleged sales. However, the assessing authority, after issuing notice and considering the reply, passed the impugned order without adequately addressing the concerns raised by the petitioner regarding the variation in closing stock.3. The petitioner raised objections regarding non-compliance with the appellate authority's direction and the lack of a personal hearing. The assessing authority justified the assessment based on the difference in closing stock and sales turnover, concluding that the entire closing stock was assessable due to reported closure of business during the year 2009-10.4. The Court noted that the assessing officer's approach and the sufficiency of objections submitted required factual adjudication beyond the scope of Article 226 proceedings. The Court emphasized that the appellate authority was better suited to consider the factual aspects and defense presented by the petitioner to arrive at a fair conclusion.5. Ultimately, the Court decided not to interfere with Ext.P5 at that stage, allowing the petitioner to prefer an appeal. The writ petition was closed, granting the petitioner four weeks to proceed further while keeping recovery steps on hold during this period. The Court highlighted the importance of a detailed factual examination by the appellate authority to address the contentions raised by the petitioner adequately.