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Gujarat High Court quashes VAT order and demand notice passed due to Procedural Lapses [Read Order]

Gujarat High Court - VAT - Procedural Lapses - Taxscan

The Gujarat High Court quashed the order and the demand notice in respect of Value Added Tax (VAT) passed by the respondent authority because of the procedural lapses and remitting the matter back to the respondent authority for fresh hearing.

The first writ applicant, M/s Viva Tradecom Pvt. Ltd is a company engaged in the business of manufacturing and sale of readymade garments and fabrics, which is duly registered under the VAT Act.

The respondent authority assessed total dues of Rs.56,12,988, which includes the VAT to the tune of Rs.17,43,164 with the interest of Rs.12,55,078 and the penalty of Rs.26,14,746 was imposed at the rate of 150% under Section 34(12) of the VAT Act vide the impugned assessment order passed in form No.304 under Section 34 of the VAT Act.

The applicant contended that the respondent authority failed to provide the copies of assessment orders including the order of cancellation of registration of vendors from whom the writ applicants purchased the goods. In such circumstances, his clients had no opportunity to prove the genuineness of such a transaction.

It was further argued that the disallowance of Input Tax Credit (ITC) without providing a copy of the order of cancellation of the registration certificate of the vendor is in gross violation of the principles of natural justice.

The respondents while vehemently opposing the writ application and has raised a preliminary objection with regard to the maintainability of the present writ application on the ground that the writ applicants have an alternative efficacious remedy of preferring an appeal against the impugned order under Section 73 of the Gujarat Value Added Tax Act, 2003.

The division bench headed by Chief Justice Vikram Nath while going root to the matter noted many procedural lapses on the part of the respondent authority.

The court further observed that there is no escape from the fact that the hearing for the purpose of imposing penalty under the Act, 2003 pursuant to the notice issued in that regard in Form No.309 was fixed on March 24 2020. The notice in Form No.309 is dated March 17 2020. However, it appears that when the representative of the writ applicants appeared before the respondent No.2 on 17th March 2020, a copy of the Form No.309 was served upon him and on the very next date i.e. March 18 2020, the hearing was undertaken and the order also came to be passed on the very same date including the order of penalty. Therefore, the bench quashed the order and remitted the matter to the respondent authority for its fresh consideration, on merits. The claim of Input Tax Credit shall be considered fresh after giving due opportunity of hearing to the writ applicants.

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