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

Held

The Court held that the penalty order (Ext.P5) was liable to be set aside due to a violation of the rules of natural justice, as there was no mention of any hearing being granted to the petitioner in the order itself or in the counter affidavit. The Court directed the 4th respondent to pass fresh orders after hearing the petitioner and considering the subsequent assessment order. For the assessment order (Ext.P6), the Court found that it was dated July 27, 2019, which was prior to the interim order of August 6, 2019, restraining proceedings on the pre-assessment notice. Since there was no jurisdictional error or violation of natural justice alleged against the assessment order itself, the Court declined to interfere with it under Article 226. Recovery proceedings for 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. WP(C) No. 12596/2019 challenged a penalty order for the assessment year 2016-2017 under the KVAT Act. At the time of filing, a pre-assessment notice for the same year was also issued. Subsequently, an assessment order was passed. WP(C) No. 23545/2019 was filed to challenge this assessment order. The petitioner argued that the assessment order was passed during the pendency of the writ petition challenging the penalty and was communicated after an interim order restraining further proceedings on the pre-assessment notice.

Key Issues

1. Whether the penalty order (Ext.P5) passed under the KVAT Act was in violation of the principles of natural justice, specifically regarding the opportunity of hearing to the petitioner, under Section 73 of the KVAT Act (implied by context of penalty proceedings)? 2. Whether the assessment order (Ext.P6) for the assessment year 2016-2017 was vitiated because it was passed after an interim order from this Court restraining further proceedings on the pre-assessment notice, and if so, what is the consequence under Article 226 of the Constitution of India? Petitioner's arguments: The petitioner contended that the penalty order was passed without affording them a proper hearing. Regarding the assessment order, the petitioner argued it was passed in defiance of an interim order from the Court. Revenue's arguments: The respondents' counter affidavit was silent on whether a hearing was accorded for the penalty order. For the assessment order, the respondents pointed out that the order was dated prior to the interim order, although service might have been later.