DRP should have held off on Final Assessment Order until Rectification Application was Resolved: Karnataka HC [Read Order]

The Karnataka High Court ( HC ) observed that the Final Assessment order which is the subject matter of the issue should have been held off by the Disputed Resolution Panel ( DRP ) until the Rectification application was resolved.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that via Annexure-D dated 21.07.2023 issued by Assessment Unit, respondent No.1.

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Mavenir Systems Private Limited, a company registered under the Companies Act, 1956, the petitioner submitted its reply on 28.07.2023 and 14.08.2023, subsequent to which respondent No.1 issued show-cause notice dated 13.09.2023, to which also the petitioner also submitted a detailed response dated 21.09.2023 and 27.09.2023, which were followed by the draft assessment order dated 27.09.2023, to which the petitioner filed objections on 26.10.2023, 11.01.2024 and 27.02.2024.

Since certain information relied upon by respondent No.1 on the draft assessment order was not made available to the petitioner, the petitioner requested the Secretary of DRP, respondent No.4 to direct respondent No.1 to furnish the relevant information.

Subsequently, filed an application under Right to Information Act, 2005, requesting respondent No.2 to provide certain details and the petitioner filed its statement before respondent No.4 on 07.06.2024. Thereafter, respondent No.4 - The Dispute Resolution Panel ( DRP ) issued directions via impugned order at Annexure-Q dated 07.06.2024.

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Aggrieved by the impugned order at Annexure - Q dated 07.06.2024, the petitioner filed a rectification application at Annexure - S and also addressed a communication at Annexure-D on 21.07.2023, requesting the respondent not to proceed further with final Assessment order ( AO ) and to await disposal of the rectification application before passing the final Assessment order.

It is the grievance of the petitioner that despite pendency of the rectification application before the respondent No.4, respondent No.1 proceeded to pass the impugned final AO, which is illegal and arbitrary. So the order which is passed in violation of the principle of natural justice and the same along with consequent demand notices and penalty notices needs to be quashed.

On the contrary, Sri.E I Sanmathi, Advocate, the counsel for the respondent submits that there is no merit in the writ petition and that the same needs to be dismissed.

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Smt. Tanmayee Rajkumar, Advocate representing the petitioner contended that, the sequence of events noticed above is sufficient to come to the conclusion that before passing of the final Assessment Order, the petitioner had filed rectification application, which was pending before the respondent No.4 - DRP, which is subject matter of the final AO.

So it is clear that respondent No.4 ought to have waited before passing the final AO, which deserves to be set aside on this short ground alone and necessary directions are to be issued to respondent No.1 in this regard.

Justice S.R Krishna Kumar directed that the Writ Petition is partly allowed. The impugned final AO at Annexure-V and consequent demand notices, all dated 09.07.2024 at Annexure-W, X1 and X2 respectively, issued by respondent No.1 are hereby quashed. Respondent No.4 is directed to dispose of the rectification application submitted by the petitioner in accordance with law after providing sufficient and reasonable opportunity and hearing them in accordance with law. 

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It is further directed that on receipt of the order on the rectification application to be passed by respondent No.4 pursuant to the present order, respondent No.1 shall proceed further in accordance with law.

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