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2016 Supreme(Online)(KER) 42724
HIGH COURT OF KERALA
A.M.SHAFFIQUE, J
M/S GALAXY HOMES PVT LTD – Appellant
Versus
THE ASSISTANT COMMISSIONR (WC) & LT – Respondent
WRIT PETITION (CIVIL) 31193/2016
The necessity of granting reasonable time and opportunity for compliance in tax assessment proceedings to uphold the principles of natural justice.
Headnote:
KVAT - Assessment - KVAT Act 22(1), 22(3), 22(4), 22(5) - Petitioner was not granted a reasonable opportunity for filing a return leading to the breach of natural justice principles.
Fact of the Case:
The petitioner challenged an order made under Section 22(3) of the KVAT Act, claiming insufficient notice to respond. Despite requesting time to reply, the assessing authority proceeded with an order without granting the requested time.
Finding of the Court:
The court found that the assessing authority acted hastily in passing the order without affording the petitioner a reasonable opportunity to respond, violating principles of natural justice.
Issues: Whether the assessing authority was obligated to grant the petitioner reasonable time to file a return after the notice was issued.
Ratio Decidendi: The court held that under the KVAT Act, specifically Section 22(4), the assessing authority must provide an opportunity to the dealer to be heard before assessment, indicating that reasonable time must be granted for compliance.
Final Decision: The order was set aside, and the petitioner was given one week to respond to the notice.
J U D G M E N T
Petitioner challenges Ext.P3 by which an order had been passed under Section 22(3) of the KVAT Act on 30/8/2016. According to the petitioner, notice in terms of Section 22(3) was received only on 23/8/2016. Petitioner submitted letter dated 27/8/2016 seeking for three weeks' time to submit reply to the notice. However, the Assessing Officer proceeded to pass an order. The contention urged is that in terms of Rule 22(5) of the KVAT Rules, the petitioner ought to have been granted fifteen days' time to file a return or to show cause.
2. Heard the learned Government Pleader who supports the stand taken by the officer. It is stated that the petitioner did not file any return and time is sought only for the purpose of replying to the notice. That apart, even today, no return has been filed by the petitioner. Therefore, there is no reason why this Court should interfere with Ext.P3 order.
3. Sections 22(1), (3), (4) and (5) read as under:-
“22. Assessment in case of non-filing of return and filing of defective return-
(1) Where the return submitted under sub- section (1) of section 20 is not in the prescribed manner or not accompanied by the prescribed documents or with incorrect particulars, the assessing authority shall, after recording its reasons, reject the return with due notice to the dealer.
Provided that the payment of any tax declared as payable as per the return shall be provisionally accepted.”
“(3) If any dealer fails to submit any return as provided under sub-section (1) of section 20 or files incorrect return and fails to file a fresh return as provided under subsection (2) , the assessing authority shall estimate the turnover of the return period and complete the assessment to the best of its judgment.
(4) No assessment under subsection (3) of this section shall be completed without affording the dealer an opportunity of being heard.
(5) On receipt of the notice under sub-section (4), if the dealer files a return for the return period as provided under subsection (1) of section 20 and accompanied by proof of payment of tax payable and interest on this amount from the due date for filing of return till the date of filing of return at the rates specified in section 31 and double the amount of interest so due as penalty the assessing authority shall drop the proposal for assessment under sub-section (3) and the assessment for the return period shall be deemed to have been completed on receipt of such return.”
As far as Section 22(3) is concerned, if a dealer does not file a return as provided under Section 20(1), the assessing authority can estimate the turnover of the return period and complete the assessment to the best of its judgment. However sub section (4) indicates that no assessment under sub section (3) shall be completed without affording the dealer an opportunity of being heard. Sub section (5) further indicates that on receipt of notice under sub section (4), if the dealer files a return for the return period as provided under sub section (1) of section 20 and accompanied by proof of payment of tax payable and interest on this amount from the due date for filing of return till the date of filing of return at the rates specified in section 31 and double the amount of interest so due as penalty, the assessing authority shall drop the proposal for assessment under sub section (3) and the assessment for the return period shall be deemed to have been completed on receipt of such return. Rule 22(5) of the KVAT Rules, 2005 reads as under:-
“22(5) The notice referred to in sub-section (1) and sub-section (4) of section 22 shall be in Form No.10G. Any dealer who receives such notice shall, within fifteen days from the date of receipt of such notice file a fresh return rectifying the defects as pointed out by the assessing authority in the notice.”
4. Learned counsel submits that fifteen days' time from the date of receipt of the notice to file a fresh return is mandatory. This is not a case where the petitioner
