Assessment actions must comply with natural justice, providing reasonable notice and opportunity to taxpayers for response before finalization.

J U D G M E N T

The petitioner is aggrieved by the finalisation of assessment, for the 4th quarter of the assessment year 2013-14, by Ext.P2. The petitioner admittedly is a works contractor, who has applied for and was granted facility, to avail of compounding under Section 8 of the Kerala Value Added Tax (KVAT) Act, 2003. The petitioner had filed the returns and paid the tax regularly for the rest of the year. Finding that the last quarter returns were not filed in time and tax paid, the Assessing Officer, is said to have issued a notice under Section 22 of the KVAT Act and concluded best judgment assessment as per Ext.P2. The petitioner assails the same in the above Writ Petition.

2. The petitioner's contention is that, in fact, he received no notice before Ext.P2 was finalized and in any event, the petitioner had filed the returns, though belatedly, on 22.05.2014 and paid tax with interest as also settlement charges. The learned Government Pleader however, submits that, though Section 22(5) provides for filing returns belatedly, after service of notice under sub section (4), herein it is to be noticed that the returns were filed after Ext.P2 proceedings were concluded.

3. It is pertinent that Ext.P2 order, speaks of a notice dated, 05.05.2014, which presumably is the notice under sub section (4) of Section 22. However, the notice is said to have been despatched to the petitioner by e-mail and the same is said to have been acknowledged on 09.05.2014. Though acknowledgment is specifically noticed in Ext.P2, from the counter affidavit, it is clear that the officer assumes the acknowledgment only for reason of the e-mail having not been returned to the sender. The statute definitely provides for service of notice by e-mail, but, it has to be noticed that there are instances where the assessee would have discontinued the e-mail address or even where the assessee for multifarious reasons is unable to access his e-mail account. Hence even if the Department despatches the e-mail in the address supplied by the assessee itself,the same would not be noticed by the respondent. Again, but for ascertaining whether the e-mail has been returned to the sender, there is absolutely no procedure prescribed for acknowledgment of such receipt.

4. In the present case, it is also to be noticed that a notice was sent on 05.05.2014, in which hearing was proposed on 09.05.2014 and the entire matter stood settled on 14.05.2014. Rule 22(5) provides for submission of revised returns within 15 days of a notice received under sub section (4) of Section 22. In such circumstance, it is incumbent on the officer to give atleast 15 days notice and in the present case, it is evident that no such time was granted to the petitioner. The opportunity referred to in sub section (4) of Section 22 would have to be a reasonable opportunity and going by the dates afore mentioned, it cannot be said that such an opportunity was afforded to the petitioner. In such circumstance, Ext.P2 stands set aside only for violation of principles of natural justice.

5. The Assessing Officer necessarily, has to consider the revised return filed by the petitioner before issuing any fresh notice under the statute for re-doing the self- assessment made by the petitioner. It is also relevant that the assessee, who had been granted compounding has to be issued a notice under Rule 11(2) before a withdrawal of the facility is made. Taking all the aforementioned reasons, to consideration, it is deemed fit that Ext.P2 be set aside and the Assessing Officer be directed to consider Ext.P4 returns filed by the petitioner as one filed after notice was issued under sub-section (4) of Section 22. It shall be so done.

The Writ Petition is allowed. No costs.