M/S S.V.Fabrics Private Limited vs. The Assistant Commissioner (St)

Facts

The petitioner, M/s S.V. Fabrics Private Limited, filed a writ petition challenging an assessment order dated March 30, 2019, passed by the Assistant Commissioner (ST) for the assessment year 2014-15 under the CST Act, 1956. The order imposed a tax liability of Rs. 8,36,233. The petitioner contended that they were exempted from tax with effect from April 20, 2012, and their registration was suo motu cancelled on February 6, 2014, due to nil returns. The petitioner further argued that they had closed their business and premises and were never served with any notices, either personally or via email, for the assessment proceedings, thus violating principles of natural justice. The respondents argued that notices were sent to the petitioner's last known address and that the petitioner could not take advantage of a change of address without informing the authorities.

Held

The Court held that the assessment order dated March 30, 2019, passed by the Assistant Commissioner (ST) for the assessment year 2014-15 under the CST Act, 1956, was liable to be set aside on the limited ground of non-service of notice upon the petitioner. The Court reasoned that the petitioner's contention of having closed their business and premises in 2014, and subsequently obtaining registration under GST at a new address, strengthened their claim of not being served. Given these circumstances, the Court concluded that the proceedings adopted by the department for service at an already vacated address were futile. Therefore, the Court found that the petitioner had not been provided with a fair and reasonable opportunity of hearing before the assessment order was passed. The assessment order was consequently set aside/quashed, and the matter was remitted to the Assistant Commissioner for fresh consideration. The Assistant Commissioner was directed to issue a fresh show cause notice to the petitioner at the address provided in the writ petition and to proceed to conclude the case on its merits after the petitioner responds.

Key Issues

1. Whether the assessment order dated March 30, 2019, passed by the Assistant Commissioner (ST) for the assessment year 2014-15 under the CST Act, 1956, is illegal, arbitrary, and in violation of the principles of natural justice due to non-service of notice on the petitioner? (Question of law and fact, concerning principles of natural justice and procedural fairness). Petitioner's arguments: The petitioner argued that they were not served with any notices, either personally or through email, before the assessment order was passed. They further contended that their business premises had been closed and vacated, and therefore, any notices sent to the old address would not have been received. This lack of notice prevented them from appearing before the authorities and substantiating their case, thus violating the principles of natural justice. Respondents' arguments: The respondents contended that notices were sent to the petitioner's last known address and that the department had no other address available to communicate. They argued that the petitioner could not benefit from not informing the authorities about a change of address and that the proceedings were conducted in accordance with law due to the petitioner's lack of response.