2023 (9) TMI 3 - HC - VAT and Sales Tax

Court rules against Private Company Limited's tax claim, citing violation of natural justice principles. Fresh hearing ordered.

M/s. S.R. Vanaspati Versus State of Jammu and Kashmir, Commissioner, Commissioner Taxes, Additional Commissioner, Commercial Taxes Jammu. Assessing Authority, Commercial Taxes/Sales Tax Circle-Kathua.

The High Court of Jammu and Kashmir and Ladakh ruled in a case involving a Private Company Limited claiming tax exemptions under SRO 246 of 1998 for ... Violation of principles of natural justice - entitlement to exemptions as per SRO 246 of 1998 dated 20.08.1998 - invocation of suo moto powers of revision under Section 12 of the GST Act, 1962 - HELD THAT:- The court being satisfied that the impugned order has been passed by the respondent in violation of the principle of natural justice, the petitioner having not been heard the petition is required to be allowed on that score alone. The petitioner has challenged the order of the respondent No. 2, impugned in the present petition, on various other grounds, which also relate to the competency of the said respondent to invoke the revisional powers under the GST Act and the period within which it could be exercised qua the proceedings which came to be initiated against the petitioner - the Court is of the view that as these grounds are required to be decided qua the other facts that have emerged in the proceedings it is in the fitness of things that the petitioner should take all these pleas which he has taken in the present petition and also urged before the court to take the same before the respondent No. 2 who had passed the impugned order. Petition allowed by way of remand. Issues Involved:1. Interpretation of tax laws and exemptions under SRO 246 of 1998.2. Invocation of revisional powers under Section 12 of the J&K GST Act, 1962.3. Compliance with principles of natural justice in administrative proceedings.Summary:The judgment by the High Court of Jammu and Kashmir and Ladakh involved a case where a Private Company Limited, a Small Scale Industrial Unit, was manufacturing Vanaspati Ghee, Refined Oil, and Acid Oil. The company claimed exemptions under SRO 246 of 1998 but faced challenges regarding purchases of Hydrogen Gas/Nickel Catalyst in relation to manufacturing. The assessing authority passed an order in 2001, which was later set aside by the appellate authority in 2004 for a detailed re-assessment. The re-assessment was completed under the J&K GST Act, 1962, affirming the company's entitlement to exemptions. However, the respondent invoked revisional powers in 2008, leading to an order in 2009 setting aside the previous assessment order for a fresh one.The petitioner contended that the proceedings had attained finality before the VAT Act, 2005 came into force, questioning the validity of invoking revisional powers post-VAT Act enforcement. The petitioner argued that the respondent failed to adhere to principles of natural justice by not providing a fair hearing before passing the impugned order. The court referenced a Supreme Court case emphasizing the requirement for quasi-judicial authorities to follow natural justice principles.Ultimately, the court found that the impugned order was passed in violation of natural justice as the petitioner was not heard, leading to the order being set aside. The court directed a fresh hearing by the respondent, emphasizing compliance with all pleas raised by the petitioner and ensuring an unbiased decision-making process.