2020 (10) TMI 212 - HC - VAT and Sales Tax

High Court sets aside Assessment Order, emphasizes natural justice in tax assessments

M/s. Radha Murali Beedi Factory Versus The Commercial Tax Officer

The High Court allowed the Writ Petition, setting aside the Assessment Order under the Central Sales Tax Act, 1956 for the period 2015-16. The matter was ... Principles of Natural Justice - Levy of Turnover Tax - rate of tax - SCN proposed to tax the turnovers pertaining to certain transactions at higher rate of tax of 14.5% alleging that the transactions are inter- State transactions, and are not supported by any documentary evidence / statutory forms - opportunity of hearing not provided to petitioner - HELD THAT:- A perusal of the impugned assessment order passed by the 1st respondent indicates that there are no reasons contained in the said order except that it is recorded that petitioner did not avail personal hearing and did not respond to the show-cause notice or the reminder notice dt.16.11.2019 or the final notice dt.06.03.2020 - There is no consideration by the 1st respondent of the legal contention raised by the petitioner that the said commodity being dealt with by the petitioner in the course of its business is exempted from tax under Section 7 of the Act read with Entry 47(b) of Schedule I thereof and that there is no statutory requirement of submission of statutory forms for claiming exemption - It is not in dispute that there is no provision for service of notice on the assesses through e-mail, and it is not the case of the respondents that the alleged reminder notice dt.16.11.2019 and final notice dt.06.03.2020 were sent in the manner indicated in the Rules framed under the Act and were served on the petitioner. There has been a violation of principles of natural justice, and that the petitioner did not have adequate opportunity to defend itself in the proceedings contended by the 1st respondent - the matter is remitted to the 1st respondent for fresh consideration - petition allowed by way of remand. Issues Involved:Challenge to Assessment Order under Central Sales Tax Act, 1956 for the period 2015-16 based on lack of documentary evidence and violation of principles of natural justice.Detailed Analysis:1. Assessment Order Challenge:The petitioner challenged the Assessment Order in AAO.No.38044, dated 27.03.2020, issued by the 1st respondent under the Central Sales Tax Act, 1956 for the period 2015-16. The petitioner, engaged in the manufacture and trade of 'Beedies', contended that the transactions were wrongly taxed at a higher rate of 14.5% as inter-State transactions without documentary evidence or statutory forms.2. Contentions Raised by Petitioner:The petitioner submitted copies of CST returns and sample invoices to support its claim that 'Beedies' are exempted under Section 7 of the CST Act, 1956. The petitioner argued that no statutory forms were required for claiming exemption and requested a personal hearing, which was allegedly not granted by the 1st respondent.3. Lack of Notice and Reasons in Assessment Order:The petitioner denied receiving notices dated 16.11.2019 and 06.03.2020 as stated in the order. The assessment order lacked reasons for levying CST on the petitioner and failed to address the legal contention of exemption under Section 7 read with Entry 47(b) of Schedule I to the Act.4. Violation of Principles of Natural Justice:The Court noted a violation of principles of natural justice as the petitioner was not given adequate opportunity to defend itself. The hurried assessment order, issued due to the impending limitation period, did not consider the petitioner's legal contentions and lacked proper communication and reasoning.5. Decision and Remedial Measures:The Court allowed the Writ Petition, setting aside the Assessment Order and remitting the matter to the 1st respondent for fresh consideration. The petitioner was granted four weeks to file objections with supporting material, and a personal hearing was mandated. The 1st respondent was directed to pass a reasoned order in accordance with law and communicate it to the petitioner.6. Conclusion:The Court's decision highlighted the importance of adhering to principles of natural justice in tax assessments and ensuring a fair opportunity for the parties to present their case. The judgment emphasized the need for proper communication, consideration of legal contentions, and reasoned decision-making in tax matters under the Central Sales Tax Act, 1956.This detailed analysis encapsulates the key legal issues, arguments, findings, and remedial measures outlined in the judgment delivered by the High Court, emphasizing the significance of procedural fairness and legal compliance in tax assessments.