M/S. Increations Designs And Contracts (PVT) LTD vs. The Asst. Commissioner(Wc)

Held

The Court held that it is not in dispute that the petitioner was not afforded a hearing before the finalization of the assessment. Even if there was ambiguity in the petitioner's reply regarding the request for a personal hearing, such a hearing ought to have been extended to an assessee before finalizing an assessment. Consequently, the Court found Ext.P3 order to be vitiated by a non-compliance with the rules of natural justice. The Court quashed Ext.P3 and directed the first respondent to pass a fresh order after hearing the petitioner. To facilitate this, the petitioner was directed to appear before the first respondent on December 3, 2019, at 11 a.m., and the first respondent was to pass fresh orders within one month thereafter.

Facts

The petitioner, M/s. Increations Designs and Contracts (Pvt) Ltd, filed a writ petition challenging an assessment order (Ext.P3) passed by the Assistant Commissioner (WC), State Goods and Service Tax Department, for the assessment year 2012-2013 under the Kerala Value Added Tax Act. The petitioner's primary contention was that the assessment order was passed without affording them a personal hearing, despite their request for one in their reply (Ext.P2) to the pre-assessment notice. The respondent contended that the petitioner had not explicitly requested a personal hearing in their reply and could have approached the authority if they desired one. The petitioner, in a reply affidavit, pointed to averments suggesting a hearing was initially scheduled but adjourned, which the respondent denied.

Key Issues

1. Whether the assessment order (Ext.P3) passed under the Kerala Value Added Tax Act for the assessment year 2012-2013 is vitiated by a non-compliance with the principles of natural justice, specifically the right to a personal hearing, as contended by the petitioner? Petitioner's arguments: The petitioner argued that Ext.P3 assessment order was passed in violation of natural justice as a personal hearing was not afforded to them, despite their request in Ext.P2. They relied on the statement in Ext.P2 indicating their readiness to provide clarifications with reference to books of account, suggesting an implicit request for a hearing if the authority had doubts. They also pointed to alleged admissions by the respondent regarding an adjourned hearing. Respondent's arguments: The respondent argued that the petitioner's reply to the pre-assessment notice did not contain an explicit request for a personal hearing, nor did the petitioner contact the authority for one subsequently. They noted the time gap between the reply and the assessment completion, suggesting the petitioner could have proactively sought a hearing.