2018 (7) TMI 1427 - HC - VAT and Sales Tax

Court quashes assessment notices due to arbitrary power, emphasizes independence of Assessing Officers

The court ruled in favor of the pharmaceutical company, quashing the revision notices for assessment years due to the respondent's arbitrary exercise of ... Jurisdiction - arbitrariness in exercise of powers - deviation proposal to his superior officer was rejected, the reasons for such rejection having not disclosed, the respondent stated that he is proceeding to issue the impugned notices - issuance of repeated notices - revision of turnover - suppression of facts or not?. Held that:- This Court has always stressed the point that the Assessing Officer is an independent authority and he cannot be directed to complete the assessment in a particular manner. Thus, if a superior officer directs the Assessing Officer to complete the assessment in the manner he proposes, then the purpose of creating an Assessing Officer and a procedure for assessment would be reduced to a mockery - In the instant case, it is clear that the Assessing Officer has been compelled by his superior officer namely the Joint Commissioner (ST), Enforcement II, Chennai-6. Apart from that, issuing repeated notices and calling upon the petitioner to submit their reply would amount to harassing a dealer and no useful purpose will be served in submitting a reply to the notices dated 18.5.2018, as already the respondent pre-judged the issue because he stated that the deviation proposal sent by him was rejected by his superior officer. The matters are remanded to the respondent for a fresh consideration - appeal allowed in part by way of remand. Issues:Abuse of jurisdiction and arbitrariness in exercise of powers regarding revision notices for assessment years.Analysis:The petitioner, a pharmaceutical company, faced revision notices for assessment years due to discrepancies in reported turnover compared to official website data. The respondent issued multiple notices over time, causing distress to the petitioner. The petitioner challenged the notices citing incomplete details and arbitrary exercise of power by the respondent, who was influenced by a superior officer. The court emphasized the independence of Assessing Officers and the need for fair assessment procedures.The court referenced a previous case where guidelines were set for assessments based on web report details. In this case, the respondent failed to adhere to the established guidelines, leading to the quashing of the impugned notices for various assessment years. The court highlighted that the Assessing Officer should not be influenced by superior officers and must make decisions independently based on dealer-provided documents.The petitioner argued that all necessary records were available, and objections were not properly considered before the issuance of subsequent notices. The court agreed that the Assessing Officer was restricted by the direction of the superior officer, which conflicted with previous court decisions. The court ruled in favor of the petitioner, quashing the impugned notices and remanding the matters for fresh consideration, emphasizing the importance of a fair assessment process without external influence.In conclusion, the writ petitions were partly allowed, and the impugned notices were quashed. The matters were remanded for a fresh consideration, with directions for a fair assessment process, including a personal hearing for the petitioner to present additional representations. The court stressed the need for independent decision-making by the respondent without external influence, ensuring a just outcome in the assessment process.