Contractual covenants in VAT assessment must be considered; set-top box assessment orders were quashed and remitted for fresh hearing.

Assessment orders under the Karnataka Value Added Tax Act concerning supply of set-top boxes were quashed because the authority failed to consider the material contractual covenants governing supply and retention, and did not provide a proper opportunity of hearing. The court treated this omission as denial of justice and an apparent error on the face of the record. The matter was remitted for fresh adjudication, with directions to hear the petitioner, permit additional evidence if necessary, and record reasons and findings on the relevant contractual terms.

---

---

Issues: Whether the assessment orders assessing the transaction of providing set-top boxes under the Karnataka Value Added Tax Act, 2003 were liable to be quashed for non-consideration of material contractual covenants and for want of a proper opportunity of hearing.

Analysis: The assessment orders did not advert to the relevant clauses of the agreement governing the supply and retention of the set-top boxes. In the absence of consideration of those material terms, the orders were held to disclose denial of justice and an error apparent on the face of the record. The matter required reconsideration after granting the petitioner a reasonable opportunity to adduce additional evidence, if necessary, and after recording reasons and findings on the contractual covenants relevant to the transaction.

Conclusion: The assessment orders were quashed and the matter was remitted for fresh adjudication in accordance with law after hearing the petitioner.

---