M/S. Mathrusri Enterprises vs. Commercial Tax Officer

Held

The Court allowed the Writ Petition. It held that the impugned Assessment Order No.44791 dated 29.03.2020 and the garnishee notice dated 02.09.2020 were set aside due to the admitted violation of the principles of natural justice, specifically the non-service of a pre-assessment show cause notice and the lack of a personal hearing. The Court reasoned that these procedural lapses rendered the assessment order unsustainable. The matter was remitted back to the Commercial Tax Officer for fresh consideration. The officer was directed to serve a show cause notice on the petitioner, indicating the proposed turnover and tax, in accordance with Rule 61(1)(b) of the Telangana VAT Rules, 2005. The petitioner was granted six weeks from the receipt of the notice to file objections, and a personal hearing was to be provided before a reasoned order was passed. The ratio decidendi is that any order passed without adhering to the principles of natural justice is void ab initio and liable to be quashed.

Facts

The petitioner, Mathrusri Enterprises, challenged an Assessment Order (AO No.44791 dated 29.03.2020) passed by the Commercial Tax Officer for the tax period 2015-16 under the Central Sales Tax Act, 1956. The petitioner claimed it was unaware of this order until September 2020, when its bank informed it about a garnishee notice dated 02.09.2020 issued to the State Bank of India under Section 29 of the TS VAT Act, 2005, leading to the recovery of Rs. 29,704/- from its account. The petitioner asserted that it had discontinued business prior to the introduction of GST and that the assessment order was passed without serving a pre-assessment show cause notice or providing a personal hearing, violating principles of natural justice. The revenue did not dispute these contentions.

Key Issues

1. Whether the Assessment Order No.44791 dated 29.03.2020, passed by the Commercial Tax Officer for the tax period 2015-16, is illegal and liable to be quashed for violation of principles of natural justice, specifically the non-service of a pre-assessment show cause notice and non-provision of a personal hearing, as contended by the petitioner under Article 226 of the Constitution of India. Contentions: Petitioner: Argued that the assessment order was passed without issuing a pre-assessment show cause notice and without providing a personal hearing, thus violating the principles of natural justice. The petitioner also stated it had discontinued business prior to GST implementation and was unaware of the proceedings until a garnishee notice was served on its bank. The petitioner relied on the violation of natural justice principles. Revenue/State: Did not dispute that a pre-assessment show cause notice was not served on the petitioner and that no personal hearing was provided, admitting a violation of the principles of natural justice.