Viju V.K. vs. The Asst.Commissioner (Works Contract)

Facts

The petitioner, Viju V.K., challenged an order (Ext.P6) passed by the Assistant Commissioner (WC), SGST Department, Ernakulam. This order suo motu rectified a previous assessment order (Ext.P5), increasing the tax demand against the petitioner. The petitioner argued that Ext.P5 was passed after a remand by the First Appellate Authority, and at that stage, the petitioner was given a hearing and submitted a reply. However, Ext.P6 was issued by the Assessing Officer to revise Ext.P5, increasing the tax demand without affording any opportunity of hearing to the petitioner, which the petitioner contended violated Section 66 of the Kerala Value Added Tax Act (KVAT Act). The tax demand in dispute is the increase from Ext.P5 to Ext.P6.

Held

The Court held that Ext.P6 was liable to be set aside as it appeared to have been issued without affording an opportunity of hearing or issuing any notice to the petitioner. The Court reiterated the settled law that the availability of an alternative remedy does not bar interference by the High Court when an order is passed in violation of the principles of natural justice. The Court found that Ext.P6 was indeed an order to the disadvantage of the petitioner, as the tax demand had substantially increased compared to Ext.P5. Therefore, the Court quashed Ext.P6 and directed the 1st respondent to pass fresh orders under Section 66 of the KVAT Act after affording an opportunity of hearing to the petitioner. The petitioner was directed to appear before the 1st respondent on 01.07.2022, and the proceedings were to be completed within one month from the receipt of the judgment's certified copy.

Key Issues

1. Whether the suo motu rectification order (Ext.P6) passed by the Assessing Officer under Section 66 of the KVAT Act, which increased the tax demand against the petitioner, is liable to be set aside for violation of the principles of natural justice by not affording an opportunity of hearing to the petitioner? Petitioner's Arguments: The petitioner contended that Ext.P6, a suo motu revision of the assessment order Ext.P5, was passed without providing any opportunity of hearing, thereby violating Section 66 of the KVAT Act. The petitioner argued that Ext.P5 itself was an order passed after a hearing and submission of a reply, and the subsequent revision to Ext.P6, which substantially increased the tax demand, necessitated a fresh hearing. Respondent's Arguments: The learned Government Pleader argued that Ext.P6 could not be strictly termed as an order to the disadvantage of the petitioner. Furthermore, the respondent contended that the petitioner had an effective alternative remedy and that the High Court should not interfere under Article 226 of the Constitution of India.