Assessment order quashed for violating natural justice & Act provisions. Petitioner to appear for fair assessment.

The Court set aside the assessment order, deeming it violative of natural justice and the Act's provisions. The petitioner was directed to appear for further assessment proceedings, ensuring compliance with procedural fairness and principles of natural justice. The respondent was instructed to consider and finalize the pending assessment, either on the specified date or a subsequent one. The writ petition was disposed of without costs.

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Issues:
Challenge to assessment order under Kerala Value Added Tax Act, 2003 for misclassification of taxable items and evasion of tax, violation of principles of natural justice under Section 25(1) of the Act.

Analysis:

The petitioner, a registered dealer under the Kerala Value Added Tax Act, 2003, contested the legality of the assessment order dated 31.12.2018, alleging it to be in violation of principles of natural justice. The respondent accused the petitioner of misclassifying taxable items to evade tax, providing details of the misclassification. The petitioner requested time to gather relevant information through various correspondences (Exts. P2, P3, and P4) due to the substantial data involved, including a request for a two-month extension to present necessary documentary evidence. However, the respondent passed the assessment order (Ext.P5) citing the petitioner's failure to produce documents despite granting sufficient time, leading to the challenge on grounds of procedural fairness and violation of natural justice.

The petitioner argued that a practical and effective hearing should precede any decision based on the show-cause notice, highlighting the absence of a hearing on 26.11.2018 as indicated in Ext.P3 notice. The petitioner's requests for adjournment and additional time were acknowledged but not acted upon, depriving them of a fair opportunity to address the serious allegations and implications on tax liability. The Government Pleader emphasized the seriousness of the charges against the petitioner, acknowledging their efforts to obtain necessary information and the repeated requests for reasonable time, underscoring the failure to adhere to procedural fairness and principles of natural justice as required by Section 25 of the Act.

Consequently, the Court set aside the Ext.P5 order, deeming it violative of natural justice and the Act's provisions. The Court directed the petitioner to appear before the respondent on 20.08.2019, accompanied by a copy of the judgment and relevant documents, for further assessment proceedings. The respondent was instructed to consider and finalize the pending assessment either on the specified date or a subsequent one, ensuring compliance with procedural fairness and the principles of natural justice. The writ petition was disposed of accordingly, without imposing any costs.

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