M/S Ski Metal Crafts PVT LTD And 2 Others vs. The State Of Telangana And 2 Others

Facts

The petitioners, M/s SKI Metal Crafts Pvt Ltd and its directors, challenged a final assessment order dated March 27, 2020, passed by the Deputy Commercial Tax Officer. This order determined a balance of Rs 18,04,409.43 against the petitioner company. The petitioners argued that the order was passed during the nationwide COVID-19 lockdown, making it impossible for them to attend office and present their case. They also sought the restoration of blocked amounts totaling Rs 9,74,567 in their credit ledger. The petitioners relied on a previous High Court order in a batch of similar writ petitions (W.P.Nos.21349 of 2020 and batch) which had set aside assessment orders passed during the lockdown due to violations of natural justice.

Held

The Court allowed the writ petition, holding that the impugned order dated March 27, 2020, was not sustainable for the same reasons as in the batch of writ petitions (W.P.Nos.21349 of 2020 and batch). The Court found that the assessment order was passed in violation of the principles of natural justice because the petitioner was prevented from presenting their case due to the COVID-19 lockdown. The Court reasoned that the assessing authorities could not assume the petitioners had no objections without considering that the assessees were prevented from attending their offices to compile necessary information. Consequently, the impugned order was set aside and quashed. The matter was remitted back to the assessing officer for fresh consideration, with a specific direction to provide the petitioner a fair opportunity to adduce additional evidence and file explanations/objections. The petitioner was directed to appear before the assessing officer on September 21, 2023. The Court explicitly stated that no further notice would be issued to the petitioner for appearance. The issue regarding the restoration of blocked amounts was implicitly addressed by setting aside the assessment order, which likely led to the blocking.

Key Issues

1. Whether the final assessment order dated March 27, 2020, passed by the Deputy Commercial Tax Officer against the petitioner company is illegal and arbitrary due to being issued during the COVID-19 lockdown, thereby violating principles of natural justice? 2. Whether the petitioner is entitled to the restoration of blocked amounts in their credit ledger? Petitioner's Arguments: The petitioner contended that the impugned order was passed during the COVID-19 pandemic lockdown, making it impossible for them to attend office and submit explanations. They argued that this violated the principles of natural justice. They relied on the Division Bench's order in W.P.Nos.21349 of 2020 and batch, which set aside similar assessment orders passed during the lockdown and remitted the matters for fresh consideration after providing adequate opportunity. They prayed for similar relief. Revenue's Arguments: The respondent revenue argued that the petitioner had already raised objections in a previous appeal, and the current order was passed after a remand. They contended that the petitioner was issued a show cause notice and had sufficient time to respond, and thus, the assessing officer passing the order on March 27, 2020, could not be faulted. The revenue did not rely on any specific provisions or precedents.