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2014 Supreme(Online)(KER) 50230
HIGH COURT OF KERALA
P.R.RAMACHANDRA MENON, J
M/S WHIRLPOOL OF INDIA LTD – Appellant
Versus
ASST COMMISSIONER ASSMT – Respondent
WRIT PETITION (CIVIL) 24148/2014
Assessing authorities must adhere to natural justice principles, ensuring adequate time and opportunity for taxpayers to present their records before finalizing assessments.
Headnote:
Taxation - KVAT Act - Sections 25(1) - Court emphasizes the importance of natural justice in tax assessments and the necessity for adequate time for record production.
Fact of the Case:
The petitioner challenged the final tax assessments under the KVAT and CST Acts issued after six years without sufficient time to prepare, seeking a review of the rushed proceedings.
Finding of the Court:
The court found the assessing authority acted improperly by finalizing assessments without granting adequate time or following natural justice principles, particularly after significant delay.
Issues: Whether the assessing authority's action to finalize tax assessments without providing the petitioner adequate time and opportunity for record submission was justified and lawful.
Ratio Decidendi: The court held that the principles of natural justice necessitate that a taxpayer be given a fair opportunity to present their case, particularly where significant delays in proceedings occur.
Final Decision: The impugned orders were set aside, directing reassessment with proper opportunity for record submission.
JUDGMENT
The assessment finalized by the second respondent for the assessment year 2007 - '08 under the KVAT Act is under challenge in W.P.(C) No. 24148 of 2014, while the proceedings finalized under the CST Act for the very same assessment year is under challenge in W.P.
(C) No. 24148 of 2014.
2. The case of the petitioner is that the petitioner had filed relevant returns also producing all the relevant documents, including 'C Forms', 'F Forms' and such other Forms as the case may be, about six years back, satisfying the tax due. It was after six years that the respondents chose to issue Exts. P1(a) and P1(b) notices in W.P.(C) No. 24148 of 2014, proposing to effect assessment under Section 25 (1) of the Act. Immediately on receipt of the said notices on 20.08.2014, the petitioner rushed to the office of the respondent and filed Ext. P5 application, seeking for two months' time to trace out all the records. However, without granting any time, respondents W.P.(C) No. 24148 of 2014 finalized the assessment proceeding passing Ext. P4 order in W.P. (C) No. 24148 of 2014, followed by Ext. P5 demand notice, which made the petitioner to approach this Court challenging the proceedings. Thereafter the petitioner was also served with Ext. P4 assessment order, finalized under CST Act, followed by Ext. P5 demand notice. This made the petitioner to prefer W.P.(C) No.
24954 of 2014.
3. The learned counsel for the petitioner submits that there is absolutely no fault on the part of the petitioner and it was none other than the concerned respondent, who was simply sleeping over the issue for nearly six years. Still, the petitioner has not even been given minimum time to trace out of the records before finalization of the assessments. It is stated that the petitioner had in fact produced all the documents as done in respect of assessment year 2006 - 07 as well. The petitioner contends that, in respect of the said assessment year, after taking much efforts, the petitioner could succeed in finding out the relevant records from the office of the assessing authority and the same was handed over to the said authority. The same course is sought to be pursued in respect of the assessment year in question i..e. 2007 -
W.P.(C) No. 24148 of 2014 '08. Much more time is necessary in view of the inordinate delay on the part of the concerned officer in issuing Exts. P1 (a) and P1 (b).
4. The learned Government Pleader submits that absolutely no documents viz. 'C Form', 'F Form' and such other Forms were produced by the petitioner, as referred to by the assessing authority in the impugned orders itself. It is also stated that the Deputy Commissioner had granted permission to have only 'six months' from 01.04.2014, to finalize the assessment.
5. After hearing both the sides, this Court finds that the assessing authority was sleeping over the issue for a period of more than six years and in the said circumstances, it is not at all proper on the part of the respondents to finalize the proceedings hastily, with reference to the granting of limited time by the Deputy Commissioner, by six months from 01.04.2014. The respondents ought not to have finalized the assessments, without following the relevant provisions of law and also the principles of natural justice. The necessity to grant an opportunity of hearing before passing the orders under Section 25 (1) KVAT Act stands declared by this Court as per the decision reported in Suzion Infrastructure W.P.(C) No. 24148 of 2014 Services Ltd. Vs. Commercial Tax Officer (WC), Ernakulam (2010 (3) KHC 299).
6. In the said circumstances, the matter requires to be reconsidered. In view of the submission made by the learned counsel for the petitioner across the Bar that the petitioner will definitely make earnest efforts to trace out the records and that the petitioner does not intend to raise the plea of limitation, the impugned orders are set aside and the assessing authority is directed to give an opportunity of hearing to the pet
