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.16298/2017 AND W.P. NOs.16636-646/2017 (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 ... PETITIONER (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 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 DIRECT 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 31.03.2008 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 01/04/2007 to 31/03/2008.
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. In a nutshell the facts of the case are that the petitioner, Mr. H. S. Vishwanath, is the 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 (‘CTO’ for short), visited the petitioner’s business place, and sought the 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. The petitioner further claims that the Deputy Commissioner of Commercial Tax (‘DCCT’ for short) passed a re- assessment order on 29.04.2014 without having served any notice upon him. 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, he filed an application for rectification of the mistakes which were 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 the 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 on 23.11.2015 he filed an application for rectification. He filed the second application for rectification which enclosing the sales register, purchases register and Form No.156. Subsequently, by an endorsement dated 01.01.2016 the respondent No.2 sought certain clarification from the petitioner. 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 No.2 has rejected the rectification application.
5. Thereafter, respondent No.2 has 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 alleged tax, interest and penalty which was imposed upon the petitioner by the re-assessment order.
6. On 03.10.2016, the petitioner filed a third application against the 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 were 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, and by his letter dated 21.01.2016, the second rectification application has been rejected by 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, they deserve to be interfered with by this Court.
8. On the other hand, Mr. T. K. Vedamurthy, the learned AGA, submits that firstly, 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, on 29.04.2014. The same was duly served as the notice contains the seal and signature of the petitioner.
Secondly, according to the re-assessment order dated 29.04.2014, the petitioner not only orally informed, but was also given repeated opportunities to produce the necessary documents. But despite 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 opportunity was 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 un justified 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. It was also stated that “in case the relevant documents are not produced within seven days, the claim of ‘input’ tax and claim of exemptions will be disallowed without any further notice/endorsement which please note”.
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 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 two applications have been rejected by this office, his third rectification application need not be considered. Therefore, the learned counsel for the respondents has supported the re-assessment order, and the rejection of the three rectification applications.
9. Heard the learned counsel for the parties, and perused the records.
10. Undoubtedly, an opportunity of hearing has to be given to the assessee as per the principles of natural justice. For, while a quasi-judicial authority may not follow the intricate procedure of law, but nonetheless it is duty bound to follow a fair procedure.
However, if ample opportunities of hearing were given to the assessee, and if the assessee has chosen not to avail the opportunities, he/she cannot be permitted to claim before this Court that opportunity of hearing has not been granted to him/her.
11. 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 (to) 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.
Mean while 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.
12. Thus, it is obvious that the petitioner had been given ample opportunities by the assessing authority for filing the relevant documents and for stating his position. Moreover, even the notice issued under Section 39(1) r/w Section 72(2), 36 and 37 of the KVAT Act, was duly served on 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.
13. The first endorsement dated 30.08.2014 further reveals that according to the Deputy Commissioner of Commercial Taxes, the petitioner claimed to have 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. Thereafter, he had sought time of few days, which was duly granted to him, for filing the aforementioned documents. But even till 30.08.2014, no such documents were ever 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.
14. 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.
15. 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, which 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 amply clear that “in case the relevant documents are 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 failed to submit the relevant documents till 21.01.2016, i.e. fourteen days. Since the petitioner failed to submit the documents within the stipulated period of seven days, the Deputy Commissioner was well justified in rejecting 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 to produce the relevant documents within a period of seven days, the petitioner was duty-bound to avail an opportunity. Therefore, the learned counsel for the petitioner is not justified in pleading that an opportunity of hearing has been denied to the petitioner.
16. Lastly, even with regard to the third rectification application, suffice it to say that repeated 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 a 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.
17. 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