2026 (3) TMI 1365 - HC - VAT / Sales Tax

Natural justice in mismatch turnover assessments led to remand for fresh adjudication with partial deposit condition.

Assessment orders concerning mismatch turnover notices were held to need fresh consideration where the taxpayer had not effectively responded and the ... Validity of assessment orders passed after notices issued on the mismatch turnover issue - assessment made without a proper and effective opportunity - Violation of principles of natural justice - Conditional Pre-deposit - tax liability on the turn-overs mismatched with the sellers. Principles of natural justice - Fresh assessment on remand - HELD THAT: - The Court noted that, though the petitioner had not responded to the notices and had approached the writ court without availing the statutory appellate remedy, the impugned orders themselves showed that only part of the demand had been dropped on the basis of the departmental circular and that the remaining issues had been decided without a proper reply from the petitioner. On that factual basis, the Court held that there was an element of violation of principles of natural justice. It therefore directed a fresh consideration on merits by treating the impugned orders as an addendum to the notices already issued, requiring the petitioner to file proper replies, and requiring the assessing authority to consider the applicable circular while redoing the assessments. The remand was made conditional upon payment of 25% of the disputed tax in cash within the time granted. [Paras 10, 11, 12, 13, 14] The matter was remitted to the respondent for fresh orders on merits, subject to the petitioner's deposit of 25% of the disputed tax and submission of replies to the notices. Final Conclusion: The writ petitions were disposed of by setting aside the impugned assessments for fresh consideration on the ground of procedural unfairness. The assessing authority was directed to redo the assessments on merits after receiving the petitioner's replies and considering the departmental circular, subject to the condition of deposit imposed by the Court. Issues: (i) Whether the impugned assessment orders warranted interference for violation of principles of natural justice and incomplete consideration of the petitioner's reply to the mismatch turnover notices. (ii) Whether the matter should be remitted for fresh assessment with a condition to deposit a part of the disputed tax.Issue (i): The impugned orders were passed after notices issued on the mismatch turnover issue, but the petitioner had not effectively responded and the assessment was completed without a proper opportunity being fully availed. The order also reflected that part of the demand had already been dropped applying the Commissioner's circular governing mismatch between purchasing and selling dealers under the VAT regime. In these circumstances, the assessment required reconsideration rather than final affirmance on merits.Conclusion: The assessments were not sustained as finally concluded on merits and required fresh consideration.Issue (ii): Since the dispute concerned turnover mismatches and the petitioner had not preferred statutory appeals, the Court balanced the need for reconsideration with a condition for partial payment. The matter was therefore sent back to the assessing authority for a fresh decision on merits, with directions to file a proper reply and for the authority to apply the governing circular while passing a fresh order.Conclusion: The matter was remitted to the respondent for fresh assessment subject to payment of 25% of the disputed tax in cash within 45 days.Final Conclusion: The writ petitions were disposed of by setting the assessments for reconsideration and directing a fresh order after opportunity to the petitioner, with a conditional partial deposit as a precondition for such reconsideration.Ratio Decidendi: Where an assessment is made without a proper and effective opportunity and the dispute requires reconsideration under the governing administrative guidance, the matter may be remitted for fresh adjudication with a conditional partial deposit.