Evm Motors vs. The Deputy Commissioner, SGST Department

Facts

The petitioner, EVM Motors, a registered dealer under the Kerala Value Added Tax Act, 2003, challenged an assessment order (Ext.P1) for the year 2015-16, issued by the first respondent. The petitioner contended that Ext.P1 erroneously included interstate purchase bills of over Rs.7 crores, which had been accounted for in the previous year. To rectify this, the petitioner filed a rectification application (Ext.P2) under Section 66 of the KVAT Act on April 5, 2021. Subsequently, the second respondent issued a notice of hearing (Ext.P5), and the petitioner presented documents (Ext.P6). However, the final order (Ext.P7) was issued by the first respondent, not the second respondent who conducted the hearing. The petitioner argued that this procedural anomaly vitiated the order and sought its setting aside, with a direction to the second respondent to reconsider the rectification application.

Held

The Court held that while normally it would not consider the merits of an order on a rectification application when alternative remedies exist, the peculiar facts of this case persuaded it to deviate from that norm. The Court found that the notice of hearing (Ext.P5) was issued by the second respondent, and the petitioner had produced documents (Ext.P6) before the said authority. However, the final order (Ext.P7) was issued by the first respondent, which raised a strong suspicion that the order was not based on the hearing conducted or the documents produced before the second respondent. The Court reasoned that once the hearing was conducted by the second respondent, it was inexplicable how the first respondent could have issued the final order. Consequently, the Court found that the writ petition deserved to be allowed and Ext.P7 was liable to be set aside. The Court directed the second respondent to rehear the petitioner, afford them an opportunity to produce all relevant documents, including Ext.P8, and pass a fresh order on the rectification application (Ext.P2) within three months.

Key Issues

1. Whether the assessment order (Ext.P7) is vitiated and incapable of favour in law due to being issued by the first respondent, despite the hearing being conducted by the second respondent, thereby violating principles of natural justice and procedural fairness, as argued by the petitioner? 2. Whether the petitioner has an alternative statutory remedy against the rectification order (Ext.P7), as contended by the revenue, precluding the High Court from entertaining the writ petition on merits? Petitioner's arguments: The petitioner argued that Ext.P7 is vitiated because it was issued by the first respondent, whereas the hearing on the rectification application (Ext.P2) was conducted by the second respondent. They asserted that the second respondent had issued the notice of hearing (Ext.P5) and received their documents (Ext.P6), and therefore, the final order should have emanated from the second respondent. They relied on the fact that Ext.P8 statement of check post data would have proven their contention if properly considered. Revenue's arguments: The revenue argued that once a final order was issued on the rectification application (Ext.P2), the petitioner's remedy was not to approach the High Court but to pursue other statutory remedies. Therefore, the writ petition should be dismissed.