2019 (2) TMI 431 - HC - VAT and Sales Tax

Court favors petitioner due to lack of natural justice in assessment process, emphasizes importance of form verification.

The Court found in favor of the petitioner, highlighting the lack of natural justice in the assessment process due to insufficient opportunity to upload ... Rectification/revision application - Forms – C and F - It was submitted that rectification application filed by the petitioner before the Assessing Officer has not been considered - Held that:- It is not in dispute that the petitioner has uploaded the statutory Forms – C and F on electronic portal on 01.01.2019. It is also not in dispute that the physical Forms submitted before the Assessing Authority along with the reply to the proposition notice were not accepted. It is apparent that, at the time of passing the reassessment order on 29.12.2018 the statutory Forms – C and F were not available while determining the taxable turnover. This determination of the taxable turnover vis-a-vis the statutory Forms submitted by the assessee on electronic portal on 01.01.2019 goes to the root of the matter. It is apparent that the Assessee indeed possessed the statutory Forms – C and F, the genuineness of the same, if ascertained or verified by the Assessing Officer and found to be true and correct, the assessee is entitled to concession in the rate of tax/deduction in the rate of tax/benefit of branch transfer. Hence, it is incumbent upon the Assessing Authority to consider the rectification application filed by the petitioner at Annexures – M and P and take a decision in the matter - this Court deems it appropriate to direct respondent No.2 to consider the rectification application filed under Section 69(1) of the KVAT Act at Annexures – M and P to the writ petition and take a decision in the matter in accordance with law after hearing the petitioner rather than acceding to the request of transferring the file to the Assessing Officer at Mysuru. Petition allowed by way of remand. Issues:Challenge to order under CST Act and KVAT Act, non-acceptance of Forms C and F, arbitrariness in assessment, pending files for other tax periods, transfer of assessment proceedings, consideration of rectification application, maintainability of writ petition, exercise of writ jurisdiction, principles of natural justice.Analysis:The petitioner challenged the order passed under Section 9(2) of the CST Act, 1956 and Section 36 of the KVAT Act, 2003, along with a demand notice. The grievance was the non-acceptance of physical Forms C and F by the Assessing Officer, who directed the petitioner to upload them on the electronic portal. The petitioner complied on 01.01.2019, but the impugned order on 29.12.2018 demanded a significant amount for tax periods April 2013 to July 2013, creating an issue of arbitrariness in assessment.The petitioner's counsel argued that sufficient opportunity was not provided to upload the forms electronically before the assessment was concluded hastily, despite time available until 31.03.2019. They also mentioned pending files for other tax periods and requested transfer of assessment proceedings to the officer at Mysuru under Section 59 of the KVAT Act, 2003. Additionally, they sought consideration of a rectification application that had not been addressed yet.The Additional Government Advocate contended that the petitioner should have exhausted the appellate remedy before approaching the Court, highlighting that the statutory Forms were uploaded after the reassessment order. However, the Court noted that the Forms were uploaded on 01.01.2019 and were crucial in determining the taxable turnover, indicating a flaw in the impugned order's assessment.The Court found that the order suffered from a lack of natural justice as adequate opportunity to upload the forms was not provided. Despite the availability of alternative remedies, the Court deemed the writ petition maintainable. It emphasized the importance of verifying the genuineness of the forms for potential tax concessions and directed the Assessing Officer to consider the rectification application filed by the petitioner before transferring the proceedings.Ultimately, the Court directed the Assessing Officer to decide on the rectification application promptly and instructed the petitioner to appear without notice. The reassessment order was stayed until a decision on the rectification application was made, emphasizing the need for a fair and expedited resolution of the matter.