2009 (1) TMI 830 - HC - VAT and Sales Tax

Reassessment order - demand notice in form VAT-180 passed under section 39(2) of the Karnataka Value Added Tax Act for the assessment period from April 2006 to March 2007 vide annexure G - Held that - It is manifest on the face of the order that the respondent has committed an error much less material irregularity in proceeding to pass the impugned order without considering the request made by the petitioner vide annexures C and D. The petitioner vide annexure C has specifically requested for time up to December 23 2008 and when he has not received any reply from the respondent again he has sent another communication dated December 10 2008 wherein he has specifically referred that his chartered accountant is coming on December 17 2008 and therefore the date of personal hearing may be fixed on December 20 2008. The said reply has been duly received and acknowledged by the office of the respondent on December 10 2008 itself. But except referring to the request made by the petitioner on December 10 2008 the respondent being the competent authority has not referred as to why he was declining to consider the request made by the petitioner and only on the basis of the reply given by the petitioner in annexure D he has concluded the proceedings. Therefore in view of not conducting proper enquiry and not affording reasonable opportunity to the petitioner the order impugned passed by the respondent cannot be sustained and the same is liable to be quashed. The matter stands remitted back to the respondent for reconsideration of the matter afresh and to take appropriate decision in accordance with law after affording reasonable opportunity of hearing to the petitioner and dispose of the same as expeditiously as possible at any rate within a period of four weeks from the date of receipt of a copy of this order.

Summary

Issues: Assailing correctness of reassessment order and demand notice under KVAT Act, 2003 for assessment period; Failure to consider petitioner's request for time and personal hearing leading to unilateral order by respondent.

Analysis:
1. The petitioner, a partnership firm registered under the KVAT Act, 2003, challenged the reassessment order and demand notice issued by the respondent for the assessment period from April 2006 to March 2007. The petitioner's grievance was that despite being a registered firm and filing monthly returns declaring sales turnover, the respondent proceeded to pass the reassessment order without considering the petitioner's requests for time and personal hearing. The petitioner specifically requested for time up to December 23, 2008, and later sought a personal hearing after December 20, 2008, due to the absence of their chartered accountant. However, the respondent failed to respond to these requests, leading to the petitioner feeling aggrieved and filing writ petitions seeking relief.

2. Upon careful perusal of the impugned order, the Court noted that the respondent had erred in not considering the petitioner's requests for time and personal hearing. The respondent proceeded to pass the order unilaterally without providing a reasonable opportunity to the petitioner. The Court observed that the respondent did not record specific and cogent reasons for declining the petitioner's requests. As a result, the Court held that the impugned order could not be sustained due to the lack of proper inquiry and failure to afford a reasonable opportunity to the petitioner. The Court emphasized the importance of conducting a fair enquiry and providing adequate opportunity before passing such orders.

3. In light of the above findings, the Court disposed of the writ petitions by allowing them in part. The impugned reassessment order dated December 16, 2008, was set aside. The matter was remitted back to the respondent for reconsideration, with directions to take an appropriate decision in accordance with the law. The Court instructed the respondent to afford a reasonable opportunity of hearing to the petitioner and dispose of the matter expeditiously within a period of four weeks. The petitioner was directed to be present before the respondent on a specified date to submit written submissions and necessary documents. The respondent was directed to receive and act upon the submissions provided by the petitioner in compliance with the Court's directions.

4. The Court granted permission to the learned Government Pleader to file a memo of appearance for the respondent within a specified timeframe. This step aimed to ensure proper representation and adherence to procedural requirements in the further proceedings related to the case. Overall, the judgment highlighted the significance of procedural fairness, reasonable opportunity, and adherence to legal requirements in administrative actions such as reassessment orders under the KVAT Act, 2003.