M/S,Sohan Enterprises vs. The Assistant Commissioner (St) And 2 Others

Held

The Court held that there was a clear violation of the principles of natural justice, causing grave prejudice to the petitioner. The Court noted that the revenue did not dispute the petitioner's assertion that the impugned order was passed without serving the reminder and final notices, and that the initial show cause notice was not served in the manner prescribed by Rule 64(1)(b) of the Telangana VAT Rules, 2005. Furthermore, no personal hearing was afforded to the petitioner. Consequently, the Court allowed the writ petition, setting aside both the assessment order dated March 31, 2020, and the garnishee notice dated November 13, 2020. The matter was remitted back to the 1st respondent for fresh consideration. The 1st respondent was directed to serve a proper show cause notice, provide a personal hearing, and pass a reasoned order within a specified timeframe. The ratio decidendi is that assessment orders passed without adhering to principles of natural justice, including proper notice and opportunity of hearing, are unsustainable.

Facts

The petitioner, M/s Sohan Enterprises, challenged an ex-parte assessment order dated March 31, 2020, passed by the Assistant Commissioner (ST) for the tax period April 2015 to March 2016 under the Central Sales Tax Act, 1956. The petitioner argued that the assessment order was passed without proper service of notices and without affording an opportunity for a personal hearing, violating principles of natural justice. The petitioner also challenged a garnishee notice dated November 13, 2020, issued to their banker, ICICI Bank. The revenue did not dispute the petitioner's claims regarding the non-service of notices and lack of personal hearing.

Key Issues

1. Whether the ex-parte assessment proceedings dated March 31, 2020, passed by the 1st respondent under the Central Sales Tax Act, 1956, for the tax period April 2015 to March 2016, are liable to be set aside for violation of the principles of natural justice, specifically concerning the non-service of a show cause notice in the prescribed manner and the denial of a personal hearing to the petitioner? Contentions: Petitioner: Argued that the initial show cause notice was sent via email, which is not the accepted mode of service under Rule 64(1)(b) of the Telangana VAT Rules, 2005. Further contended that a reminder notice dated November 16, 2019, and a final notice dated March 6, 2020, were not served, and no personal hearing was granted, despite the petitioner having filed a response electronically on September 11, 2019. Relied on principles of natural justice. Revenue: Did not dispute the petitioner's contentions regarding the non-service of notices and the absence of a personal hearing.