IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28th DAY OF APRIL, 2017 BEFORE THE HON’BLE MR.JUSTICE RAGHVENDRA S. CHAUHAN WRIT PETITION NO.16297/2017 AND W.P. NOs.16589-599/2017 (T-RES) BETWEEN:
H.S. VISHWANATH SON OF H. SRINIVASA MURTHY AGED ABOUT 61 YEARS RESIDING AT NO.1, 2, 3 & 4 BAGEGOWDA LAYOUT CHENNASANDRA SUBRAMANYAPURA POST BEHIND B.M.T.C. BUS DEPOT BENGALURU – 560 061 PROPRIETOR OF VATSALA CONSTRUCTIONS. (BY SRI.KUMAR M.N., ADVOCATE) AND:
1. THE COMMISSIONER OF COMMERCIAL TAXES DEPARTMENT OF COMMERCIAL TAXES GOVERNMENT OF KARNATAKA V.T.K. BUILDING, KALIDASA ROAD GANDHINAGAR BENGALURU – 560 009 2. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES DEPARTMENT OF COMMERCIAL TAXES GOVERNMENT OF KARNATAKA AUDIT – 3.2, VAT DIVISION – 3 ... PETITIONER ROOM NO.217, 2ND FLOOR BMTC BUILDING, SHANTINAGAR BENGALURU – 560 027.
(BY SRI. T.K. VEDAMURTHY, AGA) ... RESPONDENTS - - - -
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH RE – ASSESSMENT ORDER DATED 29.04.2014 AT ANNEXURE – F PASSED BY R-2 AND ETC., THESE PETITIONS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner has made the following prayers before this Court:
a) Issue a writ of certiorari, quashing re- assessment order dated 29/04/2014 (Annexure-F), passed by respondent No.2.
b) Issue a writ/direction to the respondent No.2, to pass re-assessment order, by affording an opportunity of hearing to the petitioner for the tax period 01/04/2006 to 31/03/2007.
c) Such other writ/order/direction, in the facts and circumstances of this case, as deem fit by this Hon’ble Court, in the interest of justice and equity.
2. The petitioner, Mr. H. S. Vishwanath, is a Proprietor of M/s. Vatsala Constructions, a registered dealer under the Karnataka Value Added Tax, 2003 (‘KVAT Act’ for short). According to the petitioner, he is carrying on the business of construction activities. He claims that he has been regularly filing the prescribed returns in VAT Form-100 before the respondents.
3. According to the petitioner, on 01.12.2007, the Commercial Tax Officer, (Enforcement)-6, South Zone, Bangalore (‘The CTO’ for short), visited the place of petitioner’s business, and sought for submission of books of accounts for the tax period 01.04.2006 to 31.03.2007, and for the tax period 01.04.2007 to 31.03.2008. Subsequently, the CTO submitted an intelligence report on 23.09.2008, before the Joint Commissioner of Commercial Taxes (Admn.), DVO-III, Bengaluru. Subsequently, the petitioner claims that the Deputy Commissioner of Commercial Tax (‘DCCT’ for short) passed a re-assessment order without having served any notice upon the petitioner. The said assessment order was passed on 29.04.2014. The said order was served upon the petitioner on 17.05.2014. Since the petitioner was aggrieved by the Assessment Order dated 29.04.2014, on 04.06.2014, the petitioner filed an application for rectification of the mistakes which was apparent on the record. However, by endorsement dated 30.08.2014, the respondent No.2 rejected the rectification application. On 05.05.2015, the respondent No.2 issued a notice to the petitioner demanding alleged amount of value added tax, interest and penalty levied in the re-assessment order.
4. Since the petitioner was aggrieved by the action of the respondent, again, he filed an application for rectification on 23.11.2015. He filed a second application for rectification enclosing the sales register, purchases register and Form No.156. Subsequently, the respondent No.2 sought certain clarification by an endorsement dated 01.01.2016. Immediately, on 27.01.2016, the petitioner submitted a letter clarifying queries raised by the respondent No.2. But despite the same, by endorsement dated 29.03.2016, the respondent has rejected the rectification application.
5. Thereafter, the respondent No.2 filed a petition under Section 42(9)(c) of the KVAT Act on 27.06.2016 before the Special Judicial Magistrate First Class (Sales Tax), Bengaluru, namely C. Misc. No.147/2016, for recovery of the alleged tax, the interest and the penalty which was imposed upon the petitioner by the re-assessment order.
6. On 03.10.2016, the petitioner filed a third application against re-assessment order dated 29.04.2014. However, by endorsement dated 05.11.2016, the third rectification application has also been rejected. Hence, this petition before this Court.
7. Mr. Kumar, M.N., the learned counsel for petitioner, has raised the following contentions before this Court:-
Firstly, the assessment order dated 29.04.2014 has been passed behind the back of the petitioner, as no notice whatsoever was given to the petitioner by the respondents.
Secondly, by the endorsement dated 30.08.2014, while the first rectification application was rejected, even then no opportunity of hearing was granted to the petitioner.
Thirdly, although the petitioner had submitted relevant documents along with the second rectification application, by his letter dated 21.01.2016, but the second rectification application has been rejected by the endorsement dated 29.03.2016, again without giving an opportunity of hearing to the petitioner. Similarly, even the third rectification application has been rejected without giving an opportunity of hearing to the petitioner. Thus, both the re-assessment orders, and the rejection of the rectification applications are in violation of the petitioner’s right under the principles of natural justice. Therefore, the impugned orders deserve to be interfered with by this Court.
On the other hand, Mr. T. K. Vedamurthy, the learned AGA, submits that on 10.03.2014 the respondent No.2 had issued a notice under Section 39(1) r/w Section 72 (2), 36 and 37 of KVAT Act, to the petitioner. The same was duly served upon the petitioner as the notice contains the petitioner’s seal and signature.
Secondly, according to the re-assessment order dated 29.04.2014, the petitioner was not only orally informed, but was also given repeated opportunities to produce the necessary documents. But despite the repeated opportunities, he failed to do so. Therefore having waited, and having given ample opportunities to the petitioner, the assessing authority decided to proceed ex-parte against the petitioner.
Thirdly, since ample opportunities were given to the petitioner, it cannot be said that principles of natural justice have been violated by the assessing authority.
Fourthly, while dealing with the first rectification application, again an opportunity of hearing was given to the petitioner which he failed to take the benefit of. According to the learned counsel, it is clearly reflected in the endorsement dated 30.08.2014. Thus, again the petitioner is unjustified in claiming that the endorsement dated 30.08.2014, has been passed behind his back.
Fifthly, even while dealing with the second rectification application, by endorsement dated 01.01.2016, the petitioner was informed that the relevant documentary proof needs to be submitted by him within a period of seven days. He was also informed that in case the relevant documents were not produced within the seven days, the claim of ‘input’ tax and claim of exemptions will be disallowed, without any further notice/endorsement.
However, despite the said notice being issued to the petitioner, for submitting the relevant documents, the petitioner failed to produce the relevant documents within the seven days granted to him. Instead, he produced the same after a period of three weeks. Thus, the respondent was justified in rejecting the second rectification application by the endorsement dated 29.03.2016.
Sixthly, having received the third rectification application, by endorsement dated 05.11.2016, the petitioner was clearly informed that since his earlier applications have been rejected, his third rectification application need not be considered. Therefore, the learned counsel for the respondents has supported the re-assessment order, and the three rejections of the third rectification application as mentioned above.
8. Heard the learned counsel for the parties, perused the records, and considered impugned order.
9. Undoubtedly, an opportunity of hearing has to be given to an assessee as per the principles of natural justice. For, while a quasi-judicial authority may not follow the intricate procedures of law, but nonetheless it is duty bound to follow a fair procedure. But if ample opportunities are given to the assessee, and if the assessee choses not to avail the opportunity, he or she cannot be permitted to claim that opportunity of hearing has not been granted to him/her.
10. A bare perusal of the Assessment Order dated 29.04.2014 clearly reveals that the assessing authority has observed as under:
Mr. Vishwanath, the proprietor was located through his business acquaintances and was contacted on Cell No.984551190 and was asked up date the department with his latest business/residential address. The proposals in the notice were explained to him and he was asked to show cause against the proposed determination of turnovers and taxes adducing documentary evidences, if any, either in person or through a practitioner or an agent authorized in writing within 07 days of receipt of the said notice.
Meanwhile the exparte proposition notice was served at the last known address also. From November 2013 till date, the dealer was contacted several times and reminded of the action awaited from his side. The dealer has been seeking time on one or the other reasons. He has not responded to the notice till date. The proceedings have been held in abeyance till now in the interest of natural justice and in order to allow the dealer to have a constructive participation in the assessment proceedings. Even after lapse of time granted as per notice dated 10.03.2014, the dealer has not filed any reply or objections.
11. Thus, it is obvious that the petitioner had been given ample opportunities by the assessing authority. Moreover, even the notice issued under Section 39(1) r/w Section 72(2), 36 and 37 of the KVAT Act, was duly served upon the petitioner. Therefore, the petitioner is not justified in claiming that during the re-assessment proceedings, no opportunity of hearing was granted to the petitioner.
12. The first endorsement, dated 30.08.2014, further reveals that according to the Deputy Commissioner of Commercial Taxes, the petitioner claimed that he has filed the copies of Sales and Purchase Registers, and TDS Certificates, in Form 156, as annexures to the rectification application. However, said annexures were, in fact, never filed. The petitioner has admitted to the said lapse. Therefore, he had sought time of few days, which was duly granted to him, for filing the aforementioned documents. But till 30.08.2014, no such documents were produced by him. Therefore, the rectification application was incomplete as it was not supported by any additional information/documents highlighting the mistake apparent on the record. Therefore, the Deputy Commissioner of Commercial Taxes was justified in rejecting the first rectification application.
13. A bare perusal of the endorsement, dated 30.08.2014, again clearly reveals that an opportunity was given to the petitioner to produce the documents.
But, the petitioner failed to take the benefit of the said opportunity.
14. Admittedly, again, the second rectification application was filed. But, by endorsement dated 01.01.2016, again the petitioner was informed by the Deputy Commissioner of Commercials Taxes that the relevant documents were missing, and those need to be submitted before the Deputy Commissioner. For this purpose, the Deputy Commissioner had given a reasonable time of seven days. Most importantly, the Deputy Commissioner had made it clear that in case the relevant documents were not submitted within the stipulated period of seven days, his claim of input tax and claim of exemptions will be disallowed. Despite the fact that the petitioner was put on notice, the petitioner had failed to submit the relevant documents. On 21.01.2016, i.e. fourteen days after he was informed to submit the relevant documents, the petitioner submitted the documents. Since the petitioner failed to submit the documents within the stipulated period of seven days, the Deputy Commissioner was justified in rejecting the rectification application, by the endorsement dated 29.03.2016. Thus, again the petitioner is unjustified in claiming that an opportunity of hearing has not been given to him. Once an opportunity of hearing was given to the petitioner, and he was asked to produce the relevant documents within a period of seven days, the petitioner was duty-bound to avail the opportunity. Therefore, the learned counsel for the petitioner is not justified in pleading that an opportunity of hearing has been denied to the petitioner.
15. Lastly, even with regard to the third rectification application, suffice it to say that repeatedly rectification applications cannot be filed especially when there is dereliction of duty on the part of petitioner himself. Therefore, the Deputy Commissioner was justified in issuing the final endorsement dated 05.11.2016, clearly pointing out to the petitioner that even on two previous occasions, the rectification applications have been filed and rejected. Therefore, the third application does not deserve to be entertained by the Deputy Commissioner. Hence, the plea raised by the learned counsel for the petitioner is clearly untenable and unsustainable.
For the reasons stated above, this Court does not find any merit in the present writ petitions. Hence, the writ petitions are, hereby, dismissed.
Sd/- JUDGE BS