The Orissa High Court has quashed the increased tax demand against Coca Cola as the enhancement was without proper intimation to assessee. It was found that the petitioner was entitled to a notice of hearing if the rectification resulted in an increase in the amount of interest.
The petitioner/assessee, Hindustan Coca Cola has challenged intimation intimating that the Joint Commissioner of Sales Tax (Appeal), in its appeal had dismissed the appeal. The petitioner then became liable to pay tax and interest within 15 days of receipt, failing which recovery proceeding will be initiated. The assessee stated that the appeal order was never communicated.
It carries error inasmuch as the rectification of appeal order is order no.3623 dated 21st October, 2024. The order reference has been correctly stated in the intimation but the date carries a mistake. Revenue committed error, albeit typographical error in printing date of the order mentioned in impugned intimation. Petitioner’s contention is that the order mentioned in impugned intimation was not served. It could not have been as the particulars of the order themselves carry an error. However, we are convinced that petitioner was aware all along.
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By the rectification there was enhancement without giving opportunity of hearing. There has been reduction in tax and increase in interest, but the aggregate demand remained the same. Proviso in sub-section(1) of section 81 says that an amendment, which has effect of enhancing an assessment or otherwise increase liability of the assessee shall not be made unless the authority has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.
According to the division bench of Justices Arindam Sinha and M.S. Sahoo, an amendment that alters an assessment or increases the assessee’s liability in any other way cannot be made unless the authority has informed the assessee of its intention to do so and given them a fair chance to be heard.
The judgment further stated that the petitioner was entitled to a notice of hearing if the rectification resulted in an increase in the amount of interest. The clause does not support the idea that aggregate demand will stay the same. The court set aside the impugned rectification order and quashed the same.
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