First American (INDIA) Private Limited. vs. The Asstt.Commissioner Of State Taxes
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The petitioner, American (India) Private Limited, a company engaged in software technology exports, filed a writ petition challenging an ex-parte assessment order dated March 23, 2019, passed by the Assistant Commissioner of State Taxes. This order levied an amount of Rs. 7,33,68,769.00 as unpaid tax for the assessment period 2014-15. The petitioner was informed of outstanding dues on July 1, 2022, and upon inquiry, obtained a copy of the assessment order. The petitioner contended that the show cause notice, issued on November 15, 2017, was returned unserved with the endorsement 'the addressee left,' leading the respondent to presume no objection and pass the ex-parte order. The petitioner argued this violated principles of natural justice as they were not served and thus could not file a reply or attend a personal hearing.
Held
The Court held that the ex-parte assessment order dated March 23, 2019, was passed in gross violation of the principles of natural justice. The reasoning was that the petitioner was not served with the show cause notice, which was returned unserved. This prevented the petitioner from filing a reply or participating in a personal hearing. The Court accepted the respondent's submission for a remand. The ratio decidendi is that an assessment order passed without proper service of the show cause notice, thereby denying the assessee an opportunity to be heard, is unsustainable in law. The Court quashed and set aside the impugned assessment order. The first respondent was directed to serve a fresh show cause notice on the petitioner at the address provided in the writ petition. The petitioner was to submit its reply, and thereafter, the first respondent was to pass an appropriate order for the assessment period 2014-15 in accordance with law, ensuring compliance with the principles of natural justice. The Court also directed the respondents to withdraw any coercive steps taken based on the quashed order. The petitioner's request to lift the blockage of SGST credit and permit its utilization or refund was implicitly addressed by setting aside the order that led to the blockage.
Key Issues
1. Whether the ex-parte assessment order dated March 23, 2019, passed by the Assistant Commissioner of State Taxes, is liable to be set aside for violating the principles of natural justice, specifically concerning the non-service of the show cause notice on the petitioner? (Question of law and fact, concerning principles of natural justice and procedural fairness). Petitioner's arguments: The petitioner argued that the assessment order was passed in gross violation of the principles of natural justice because they were not served with the show cause notice. Consequently, they were unable to file a reply or appear for a personal hearing. They asserted that the question of availing alternative remedies did not arise due to this fundamental procedural flaw. Respondents' arguments: The learned counsel for the respondents fairly submitted that the matter could be remanded back to the file of the first respondent for a fresh hearing and passing of a new assessment order.
Sections Cited
Article 226 of the Constitution of India
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following: ORDER I Respondents to lift the blockage of its SGST credit of Rs.7,33,68,7691 in its Electronic credit Ledger and permit petitioner to utilize such credits in discharging its outward GST liabilities or claim the unutilized credit as refund, and I THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN THE HONOURAB LE MRS JUSTIC E SUREPALLI NANDA ORDER: (Per the Hon'bte the Chief Justice Ujjal Bhugan) l-leard Mr. Prasad Paranjape, learned counsel representing Mr. Karan Talwar, learned counsel lor the petitioner and Mr. L.Venkateswar Rao, learned Standing Counsel, Commercial Tax lor the respondents'
By filing this petition under Article 226 of t}:'e Constitution of India, petitioner has prayed for the following reliefs: "(i) to issue a Writ, Order or direction particularly one in the nature of a WRIT OF MANDAMUS calling for the records pertaining to the Petitioner in the Iile lcading to issuancc of ex'parle Assessment Order (AO) No. 16008 datcd 23.O3.2O19 (impugned order) and after examining the legatity alrd validity thereof be pleased to set aside the impugTred order (Annexllre " I ") passcd by the Respondent No' 1; thc Cou rt mali 5" plcascd to issue a Writ of Mandal-rus or any other appropriate writ or order I (iil AND WRIT PETITION No.29262 qf,2o22 I
:1(.J ii .s,\./ t r,:. i). l,' o. ) 9 2 r.t 2 ..1' .al 0 2 ) or dircction orderinq ancl dircctu.tg thc Rcspondents Io nor takc a:rJ a(.tion rnclu,lirrg coercive recovery cn the petiticne.r pursuant to the impugned order. lo recc.x,er lhc rax drrls as , onfirmed in lhc impugrreC ordr.r. (iii) the Court ma,y be pleascd tc issuc :r Writ o[ Maldamus or arly other appropriarl writ or order or direction ordering anrl iirectine the Re spondents to lifi the blc.,ckagc oi its SGST credit of Rs.7,33,68,769/ _ in its Eirctroi::,: Ltredir Lcdger anci permit petitioncr to utilize slt:h crecits in discharging its outward GST liabilities or claim the unutilized credit as relund; and iit, ) the Court may be plr:.rscd to pass si!._ii othcr ()r-d.r or orders as the Courl mav deern iit and pi_oper irr the circumstances of the case.,,
It is stated that petitioner- is a compan_v incorporated under the Companies Act. l95O cngaged in the business of exporting software technologlz. It is registereci under the Telangana Value Addecj Tax A.ct, 2005 as viell as Llrrder the Central Sales Tax Act, i 956. According to the petitioner, it changed its registered adclress in December, 2Ol2 and re-located to a new address though in Hyderabad ). / 'i ,l
-r'-*-- H(J & .SNJ W.P.No.29262 ol 2022 itself from where it continued to make correspondence with the respondents
Recently i.e., on O1.O7.2022 petitioner was informed from the office of l't respondent that there are outstanding dues againr;t the petitioner for the assessment period 20 14-i5. On enquiry petitioner could collect a copy of final assessment order dated 23.03.2079 for the aforesaid assessment period as per $,hich an amount of Rs.7,33,68,769.00 was levied as tax not paid.
From a perusal of the final assessment order dated 23.03.2019, we find that a show cause notice was issued to the petitioner on 15.11 .2017 . However, in the final assessment order itself it is recorded that though show cause notice was issued and dispatched to the petitioner by registered post with acknowledgement due, the same was returned unserved with the endorsement that "the addressee left". On that basis I "t respondent presumed that petitioner had no objections to the demand raised in the show cause notice and proceeded to lery the tax as mentioned above. 3
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Learned cotinsei {br the pelit:ocer sr-l};mits that the impugnecl linal assessment orcier da.ted 23.03.20 l.; i,;ars passeC in gross violation of the principles oI natural justice; as the petitiolter \,vas not served r,;itl_r the sl,row cause noIi..t:. it. r /( .i .., .-:.r / Ii lr \.. :t 1.r-la,-r. .i tt- ..1 could neither lile perscnal hearing. any reply nor could t.emain pr.jsenl jor Therefore, question ol availing aiternative remed_r' does not arise.
Mr. Venketesrvar Rao, Iearned counsel tbr thc respondents fairly submits that the matter may be rerna-ndeC back to thc file of the i "r responrient for he aring th r:: 11;11131 afrr:sh ald passing a fresh order of assessment. B. In view oi the above and on due consideration, we set aside and quash the final assessrnent order dated 23.O3.2019. Respondent No. I shall serve upon the petitioner a fresh shou, cause notice in the address mentioned by the petitioner in the writ petition whereafter petitioner sl-Iall / subm it its reply. 1 st respondent shali thereafter pass appropriate order for the assessment period 2014_15 in -- I I
HCJ & S,ryJ W.P,Nc.t.29262 of 2022 accordance with law after compl-ying with the principles of natural justice. Needless to sa-y, since we have set aside and quashed the final assessment order dated 23 .O3 .2O1g, respondents shall withdraw the coercive stelrs laken on the basis of the final assessment order dated 23.O3.2O1g.
Writ Petition is accordingly allowed. However, there shall be no order as to c,lsts.
Miscellaneous applications pending, if any, in this Writ Petition shall stand closed. P.PADMANABHA REDDY ASSISTANT REGIS R //// SECT OFFICER i) To,
The Assistant Commissioner of State Taxes, Madhapur-ll Circle, Hyderabad (Rural) Division, Hyderabad.
The Commissioner of State Taxes, Hyderabad.
The Principal.Secretary, Revenue (CT-ll) Department, State of Telangana Secretariat, Hyderabad.
One CC to Sri Karan Talwar Advocate [OPUC]
One CC to Sri L. Venkateswar Rao, SC for Cohmercial Taxes (OpUC)
Two CD Copies
One Spare Copy MBC cJP/r,- I I \
HIGH COURT DATED: 1910712022 HE STate 1 t o 11 AIJG 2022 .L ORDER WP.No.29262 ot 2022 DISPOSING OF THE WRIT PETITION WITHOUT COSTS fv^{>' \o t dr'-' --.=::::=:= ::- t, \ \., @ )
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.