M/S.Decathion Sports INDIA PVT LTD vs. The Assistant Commissioner

Held

The Court held that the penalty order (Ext.P5) in WP(C) No. 12596/2019 was liable to be set aside on the ground of violation of the rules of natural justice, as there was no mention of a hearing being accorded to the petitioner in the order itself, and the respondents' counter affidavit was silent on this aspect. The Court directed the 4th respondent to pass fresh orders after hearing the petitioner and considering the subsequent assessment order. Regarding WP(C) No. 23545/2019, the Court found that the assessment order (Ext.P6) was dated July 27, 2019, which predated the interim order of August 6, 2019, even if service was later. In the absence of jurisdictional error or violation of natural justice concerning the assessment order, the Court declined to interfere under Article 226. Recovery proceedings for the amounts confirmed by the assessment order were stayed for one month to allow the petitioner to approach the Appellate Authority.

Facts

The petitioner, M/s. Decathlon Sports India Pvt. Ltd., filed two writ petitions before the Kerala High Court. WP(C) No. 12596/2019 challenged a penalty order for the assessment year 2016-2017 under the KVAT Act, alleging a violation of natural justice due to lack of a hearing. During the pendency of this petition, an assessment order for the same year was passed. Consequently, WP(C) No. 23545/2019 was filed to challenge this assessment order, arguing it was passed during the pendency of the earlier writ petition and after an interim order had been issued. The assessment order was dated July 27, 2019, while the interim order was dated August 6, 2019.

Key Issues

1. Whether the penalty order (Ext.P5) passed by the 4th respondent under the KVAT Act for the assessment year 2016-2017 is liable to be set aside for violation of the principles of natural justice, specifically the right to a hearing? (Question of law) Petitioner's contention: The petitioner was not afforded a hearing before the penalty order was passed, violating natural justice. The penalty order itself does not mention any hearing. Revenue's contention: The counter affidavit filed by the respondents, while referring to the petitioner's replies to the penalty notice, is silent on whether a hearing was actually accorded. The judgment notes no specific argument from the revenue regarding the hearing itself. 2. Whether the assessment order (Ext.P6) passed for the assessment year 2016-2017 is invalid because it was issued after an interim order from this Court restraining further proceedings based on a pre-assessment notice, even though the assessment order predates the interim order's communication? Petitioner's contention: The assessment order was passed while a stay was in operation against further proceedings. The order was communicated after the interim order was passed. Revenue's contention: Not recorded.