Veena Chemicals vs. The State Tax Officer

For the assessment year 2017, penalty was imposed on the petitioner under section 47(6) of the Act. On the basis of the penalty so imposed, the assessing officer initiated proceedings under section 25(1) of the Act by issuing a notice dated 22.02.2021. Controverting the allegations in the show-cause notice, petitioner filed a reply on 10.03.2021, raising various objections and even specifically sought for an opportunity of hearing.

Though the objection of the petitioner was received by the respondent on 10.03.2021, the impugned order of assessment was issued on 12.03.2021, without even granting an opportunity of hearing. The above circumstances have prompted the petitioner to prefer this writ petition.

I have heard Sri.S.Anil Kumar, the learned counsel for the petitioner as well as Smt.Jasmin M.M., the learned Government Pleader for the respondent.

Admittedly, before issuing Ext.P4 order of assessment, the assessee was not given an opportunity of hearing. The assessing officer has in the assessment order, observed as follows: “The dealer had (sic.) given an opportunity to file written objections if any and for personal hearing on 03.03.2021, 11 AM at my office at tax tower, fourth floor, failing which it would be presumed that the dealer had nothing to offer against the proposal and the proposal would be confirmed. On receiving the notice the dealer seeked (sic.) adjournment, which was granted and case was posted for hearing on 10.03.2021. On 10.03.2021, itself the dealer filed reply against the proposal. The reply was perused and it was ascertained that the dealer has put in blame on the assessing authority that the assessing authority has not gone on merit and requested to verify the veracity of the OR. Also the dealer stated that the assessing authority has not intimated the result of independent evaluation of the materials on record so as to enable them to submit a proper reply to proposal.”

After the aforesaid observation, the assessing officer proceeded to consider the case of the assessee on merits and issued the impugned order of assessment.

It is evident from a reading of the above extracted portion from the impugned order, that, the opportunity for filing written objections and for personal hearing was granted to the petitioner on the same day, i.e., 03.03.2021, which was adjourned to 10.03.2021, on which day the petitioner preferred its objections. Thus it is evident that, after filing the reply, no further opportunity of hearing was granted to the petitioner.

Sri.S.Anil Kumar, learned counsel for the petitioner invited my attention to the judgments in W.P.(C) No.14332 of 2010 and W.A. No.1370 of 2011 to contend for the proposition that if after perusing the reply, the assessing officer is not satisfied about the contentions raised, an opportunity of hearing must thereafter be granted. In W.P.(C) No.14332 of 2010, while considering the issue that arose under section 25(1) the learned single Judge of this Court had held that “The requirement of issuing notice on the dealer as stipulated under section 25(1) of the KVAT Act is the 'pre-requisite' to enable the assessing authority to proceed to determine the tax to the best of its judgment. On receipt of the notice, the assessee is at liberty to explain the position and if the explanation is satisfactory, the assessing authority may not proceed further and the matter may be closed. If the explanation is not satisfactory, then the question comes, as to the necessity to pass an assessment under sub section (1) of Section 25. It is at this juncture, the statute mandates that the dealer shall be given a reasonable opportunity of being heard before making an assessment under the above sub section.”

A reading of the above observations of this Court clearly indicates that after the reply is filed, an opportunity of hearing must be granted to the assessee, if the assessing officer does not agree with the contentions raised in the objection.

It is evident from the circumstances of the present case that the assessee was not granted an opportunity of hearing. On 10.03.2021, the objections were filed and the same was considered and found to have no merit and is seen rejected. However, the request for personal hearing, sought for by the petitioner, was not even considered by the officer. In such circumstances, I am of the firm view that the principles of natural justice was infringed while issuing Ext.P4. The impugned order of assessment is therefore liable to be set aside. However, the interest of justice demands that the assessing officer passes fresh orders of assessment in a time bound manner, after granting an opportunity of hearing to the petitioner.

In view of the above circumstances, Ext.P4 shall stand set aside and the Assessing Officer is directed to pass fresh orders after granting an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a copy of this judgment. The writ petition is allowed as above. BECHU KURIAN THOMAS JUDGE vps APPENDIX OF WP(C) 10332/2021 PETITIONER EXHIBITS EXHIBIT P1 COPY OF NOTICE DATED 22.2.2021 ISSUED BY THE RESPONDENT U/S.25(1) OF THE KVAT ACT FOR THE YEAR 2017-18. EXHIBIT P2 COPY OF REPLY DATED 10.3.2021 FILED BY THE PETITIONER. EXHIBIT P3 COY OF THE JUDGMENT OF THIS HON'BLE TALUK CO-OPERATIVE RUBBER MARKETING SOCIETY