The assessment order was quashed for violating natural justice principles, including failure to provide notice and opportunity to be heard, and was found to be backdated beyond the statutory limitation period.

JUDGMENT :

(M.S. Sonak J.)

1. Heard learned Counsel for the parties.

2. Rule. The rule is made returnable immediately at the request and with the consent of the learned Counsel for the parties.

3. The Petitioners challenge the impugned order dated 19 March 2022 and the impugned demand notice of the same date on the grounds of failure of natural justice, non- application of mind and legal mala fides.

4. Petitioners 1 and 2 are established per Luxembourgian Laws. Petitioner No.3 is a company incorporated under the Indian Companies Act of 1956.

5. Petitioners 1 and 2 had, inter alia, granted the 3rd Petitioner the right to use their IPR in India. In that sense, Petitioners Nos.1, 2, and 3 are group companies. By a product license agreement effective from 1 April 2013, the right to use such IPR in India was also extended to M/s. Imsofer Manufacturing India Pvt Ltd. A product license agreement effective from 1 January 2013 was also entered into between the 2nd Petitioner and MPG Multi Production Group India Pvt Ltd concerning IPRs.

6. On 5 May 2023, the Petitioner No. 3 in Pune, India, received a notice dated 3 May 2023 in Form 301 for assessment for FY 2015-2016, addressed to the 1st and 2nd Petitioners seeking to levy VAT on the value of ‘royalty’ payments made by the 3rd Petitioner against the license to use IPRs and technical know-how granted by 1st and 2nd Petitioner by treating the same as a ‘sale of goods’.

7. The Petitioners have pleaded that Form 301, dated 3 May 2023, was the first time that any of the Petitioners had received an intimation as to the assessment of the 1st and 2nd Petitioners under the Maharashtra Value Added Tax Act, 2002n (“MVAT Act”) for any period.

8. Under the notice dated 3 May 2023 (served upon the 3rd Petitioner) on 5 May 2023, Petitioners 1 and 2 were required to remain present before the 3rd Respondent on 23 May 2023 concerning the assessment of royalty payments for FY 2015-2016. Since the Petitioners Nos.1 and 2 were incorporated in Luxembourg and considering the short notice, Mr Vikas Gattani, Assistant General Manager of the 3rd Petitioner, appeared before the 3rd Respondent on 23 May 2023 and applied for an extension of time to obtain appropriate authorisation from 1st and 2nd Petitioners and to file a detailed response to the notice dated 3 May 2023.

9. The Petitioners have pleaded that the 3rd Respondent granted the oral extension as prayed for by Mr Gattani and Mr Gattani was informed that the next date for appearance would be notified to the Petitioners.

10. The Petitioners have pleaded that on 1 July 2023, the third Petitioner was shocked to receive an assessment order dated 24 May 2023 from the third Respondent confirming the demand for VAT on royalty payments for FY 2015-2016.

11. The Petitioners have pleaded that in addition to the assessment order dated 24 May 2023, the 3rd Petitioner was also served with the following:-

“(a) Assessment Order, purported to be dated 14.03.2022, confirming the demand of VAT on Petitioners No. 1 and 2 for FY 2013-14 [Impugned Order]; and (b)Assessment Order, purported to be dated 20.03.2023, confirming the demand of VAT on Petitioners No. 1 and 2 for FY 2014-15.”

12. The Petitioners have categorically pleaded that they were never served with any notice or granted any opportunity of personal hearing in respect of FY 2013-2014 and FY 2014- 2015. They have pleaded that until the receipt of the above assessment orders, the Petitioners were completely in the dark about any assessment proceedings initiated by the Respondents under the MVAT Act.

13. Accordingly, the present Petition challenges the assessment order dated 14 March 2022 confirming the VAT demand on the first and second Petitioners for FY 2013-2014.

14. Mr Rohan Shah learned Senior Advocate for the Petitioners, submits that the impugned assessment order was made in flagrant breach of the principles of natural justice and fair play. He submitted that neither was any show cause notice issued to the Petitioners nor