Punamchand Dularam Kularia vs. The Commercial Tax Officer

Held

The Court held that there was a clear violation of the principles of natural justice, causing prejudice to the petitioner. The Court found that the petitioner's explanations were not considered, and no personal hearing was afforded before passing the assessment order. The Court also noted the discrepancy in passing the order in the individual name of the proprietor instead of the proprietary concern. Consequently, the Court allowed the writ petition. The impugned assessment order dated March 29, 2020, and the garnishee notice dated November 2, 2020, were set aside. The matter was remitted back to the 1st respondent for fresh consideration. The 1st respondent was directed to issue a fresh show cause notice to the petitioner, indicating the proposed turnover and tax, in accordance with Rule 64(1)(b) of the Telangana VAT Rules, 2005. The petitioner was granted six weeks to file objections, and a personal hearing was to be afforded. A reasoned order was to be passed thereafter. No costs were awarded.

Facts

The petitioner, Punamchand Dularam Kularia, proprietor of M/s. BNP Interiors, challenged an assessment order dated March 29, 2020, passed by the Commercial Tax Officer (1st respondent) under the Central Sales Tax Act, 1956, for the tax period 2015-16. The petitioner learned of this order when a garnishee notice in Form GST DRC-13 was issued to its banker on November 2, 2020. The petitioner claims the assessment order, which raised a demand of Rs. 5,98,412/-, was passed in their individual name instead of the proprietary concern. They also allege that their explanations filed on August 22, 2019, November 19, 2019, and March 7, 2020, were not considered, and no personal hearing was afforded. The respondents did not dispute these facts.

Key Issues

1. Whether the final assessment order dated March 29, 2020, passed by the 1st respondent under the Central Sales Tax Act, 1956, for the tax period 2015-16, is vitiated by a violation of the principles of natural justice, specifically regarding the non-consideration of the petitioner's explanations and the denial of a personal hearing? (Section 9 of CST Act, 1956, and principles of natural justice). 2. Whether the final assessment order is liable to be set aside for being passed in the individual name of the proprietor instead of the proprietary concern, M/s. BNP Interiors, despite the registration and returns being in the firm's name? (Section 9 of CST Act, 1956, and principles of natural justice). Petitioner's arguments: The petitioner argued that the assessment order was passed in violation of natural justice as their explanations were not considered, and no personal hearing was granted. They also contended that the order was wrongly passed in their individual name instead of the proprietary firm. Revenue's arguments: The respondents, through their counsel, did not dispute the facts presented by the petitioner.