2017 (4) TMI 1592 - HC - VAT and Sales Tax

Violation of principles of natural justice - opportunity of personal hearing not provided - Validity of assessment order - non-payment of tax - allegation is that the other end dealers from whom, the petitioner effected the purchase have not paid tax - whether the petitioner can be fastened with the liability of the selling dealer? - HELD THAT - The Assessing Officer, without affording the personal hearing, passed the orders of assessment only by stating that the petitioner did not take any effort to prove that the selling dealer has paid the tax. When a personal hearing is sought for by the petitioner, the Assessing Officer, before coming to a conclusion that the petitioner did not prove the payment of tax by the selling dealer, ought to have given an opportunity to the petitioner to appear in person and satisfy as to how such conclusion is either factually wrong or legally not sustainable, as it is specifically contended by the petitioner that they cannot be fastened with such liability. The matter has to go back to the Assessing Officer to redo the assessment once again, after giving an opportunity of hearing to the petitioner - Petition allowed by way of remand.

Summary

Issues involved: Challenge to assessment orders for Assessment Years 2012-2013 to 2016-2017.

Analysis:
The judgment pertains to writ petitions challenging assessment orders for specific assessment years. The impugned orders were based on the fact that the dealers from whom the petitioner made purchases had not paid taxes. The petitioner, in response to the notice of proposal, argued against being held liable for the selling dealer's tax obligations and requested a personal hearing. However, the Assessing Officer proceeded with the assessment without providing the requested personal hearing. The court observed that when a personal hearing is requested, the Assessing Officer must allow the petitioner to present their case before making a decision based on non-payment of taxes by the selling dealer. The court concluded that the matter should be sent back to the Assessing Officer for a reassessment, emphasizing the importance of granting a personal hearing to the petitioner. The writ petitions were allowed, the assessment orders were set aside, and the Assessing Officer was directed to redo the assessment after providing the petitioner with an opportunity for a personal hearing within six weeks from the date of the order.

This judgment highlights the significance of procedural fairness in tax assessments, particularly when issues of liability are raised by the taxpayer. It underscores the principle that a taxpayer should be given a chance to present their case, especially when requesting a personal hearing to contest the basis of the assessment. The court's decision to set aside the assessment orders and remit the matter back to the Assessing Officer emphasizes the importance of due process and the right to be heard in such proceedings. The directive for the reassessment to be conducted promptly within a specified timeframe further emphasizes the court's commitment to ensuring timely resolution of tax disputes while upholding the principles of natural justice.