The Tripura High Court quashed the order demanding unpaid taxes with interest and penalty under VAT Act for inadequate hearing.
The petitioner, ITC Limited has challenged an order dated 26.02.2021 passed by the Superintendent of Taxes, Agartala demanding a sum of Rs.1,18,79,583/- by way of unpaid taxes with interest and penalty for the assessment year 2015-16 under Tripura Value Added Tax Act. The petitioner has also challenged an order dated 23rd March, 2021 passed by the Superintendent of Taxes rejecting the petitioners’ application for rectification of the assessment order. These orders are challenged primarily on the ground of breach of principles of natural justice.
According to the petitioner, after certain hearings before the Assessing Officer, further hearing was fixed on 23.11.2020. On 23.11.2020, the representative of the petitioner company was present to advance his arguments before the Assessing Officer. However, the Assessing Officer could not conduct the hearing. Thereafter, there was no further communication or notice from the Assessing Officer to the petitioner or its representative till the order of assessment was passed on 26.02.2021. In short, the case of the petitioner is that the assessment order was passed without completing the hearing of the assessment proceedings.
The petitioner contended that the Assessing Officer failed to take into account several documents on record and erroneously came to the conclusion that the petitioner had not produced the F-Form along with the return but produced only at the time of the assessment and therefore the same was considered as inter- state sale.
On the other hand the case of the department is that no one was present on behalf of the petitioner before the Assessing Officer in the first half of 23rd November, 2020. The Assessing Officer had other commitments in the second half and therefore the hearing could not be conducted on that day. Thereafter, several notices were sent to the petitioner for fresh dates of hearing, however, the representative of the petitioner did not participate. The Assessing Officer, therefore, had no choice but to conclude the hearing upon which the impugned order of assessment was passed.
The division bench of Chief Justice Akil Kureshi and Justice S.G.Chattopadhyay noted that the petitioner is a company whose Head Office is registered at Kolkata. Its representatives such as accountants and legal representatives would have to travel long distances to appear before the Assessing Officer and it is not certain that such hearing could be concluded in one day.
“When we are quashing the very order of assessment on the ground of inadequate hearing, it is not necessary to examine the legality of the order passed by the Assessing Officer on rectification application,” the court said.
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