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.16485/2017 (T-RES) BETWEEN :
M/S. SJP CREATIONS NO.46/52, 10TH “A” MAIN, 1ST BLOCK, JAYANAGAR, BENGALURU – 560011, REPRESENTED BY ITS DIRECTOR SRI AJAI J. PAI, AGED 41 YEARS. ... PETITIONER (BY SRI K. M. SHIVAYOGISWAMY, ADVOCATE) AND:
1. STATE OF KARNATAKA BY ITS SECRETARY DEPARTMENT OF FINANCE, GOVERNMENT OF KARNATAKA, VIDHANA SOUDHA, BENGALURU – 560001.
2. THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA, COMMERCIAL TAXES BUILDINGS, GANDHINAGAR, BENGALURU – 560009.
3. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES, (AUDIT)-3.3., DVO-3, ROOM NO.224, 2ND FLOOR, TTMC “B” BLOCK, BMTC BUILDING, SHANTHINAGAR, BENGALURU – 560027. ... RESPONDENTS (BY SRI T. K. VEDAMURTHY, AGA) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE R-3 ORDER DATED 31.03.2017 VIDE ANNEXURE-G AND THE CONSEQUENTIAL DEMAND NOTICE ISSUED THERETO IN FORM NO.180 BEARING TIN NO.29000000000 DATED 31.03.2017 VIDE ANNEXURE-H AS BARRED BY LIMITATION AND VIOLATIVE OF PRINCIPLES OF NATURAL JUSTICE AND ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING :
O R D E R The petitioner is aggrieved by the assessment order dated 31.03.2017, and by the consequential demand notice dated 31.03.2017, issued by the respondent No.3.
2. Briefly the facts of the case are that the petitioner’s firm had produced a feature film by the name of “Shivamani”. The petitioner had entered into an Assignment Agreement with M/s. Sun TV Network Ltd., Chennai, for taking assignment of the copyright of the said film for a consideration of Rs.55 Lacs. As per the agreement, the assignee M/s. Sun TV Network Ltd., had paid the said consideration of Rs.55 Lacs through four cheques. The said cheques were handed over after deducting the TDS and other deductions. In fact, the TDS Certificate in Form 16A dated 13.06.2009 was issued.
3. This being the state of affairs, the respondent No.3, the Deputy Commissioner of Commercial Taxes (“DCCT”, for short) issued a notice in Form No.275 to the petitioner for production of books of accounts. However, the DCCT did not mention any reason for insisting on the production of books of accounts of the petitioner’s firm. The petitioner is not even registered under the KVAT Act. Thereafter, on 21.03.2017, the respondent No.3 had issued a proposition notice under Section 38 (7) of the KVAT Act. According to the said notice, the respondent No.3 proposed to levy tax on the consideration received by the petitioner on the transfer of right to use feature films on the basis of the information received from the Enforcement Wing. The petitioner was given seven days time for filing his objections before the respondent No.3. However, the said notice was received by the petitioner on 31.03.2017, i.e., beyond the period of seven days granted in the notice. Thus, the petitioner was not in a position to file his objections within the stipulated period of seven days. Therefore, on 04.04.2017, the petitioner submitted an application seeking a period of fifteen days time for filing his objections. But, notwithstanding the prayer made by the petitioner, on 31.03.2017, the assessment order was passed. Hence, this petition before this Court.
4. The learned counsel for petitioner submits that since the notice itself was received beyond the period of seven days, the petitioner had no time to file his objections before the Assessing Authority. Therefore, the Assessing Authority was not justified in passing the impugned order without giving an opportunity of hearing to the petitioner. Thus, the assessment order is in violation of the principles of natural justice. Therefore, the assessment order deserves to be interfered with by this Court.
5. The learned counsel for the respondent Nos.2 and 3, on the other hand, submits that since the petitioner had received the notice on 31.03.2017 itself, the petitioner was unjustified in seeking extension of time by his application dated 04.04.2017. Thus, the learned counsel has supported the impugned assessment order.
6. It is, indeed, trite to state that a quasi-judicial authority is bound by the principles of natural justice. Although the quasi-judicial authority may not follow the intricate procedure of law, but nonetheless, it is duty bound to follow a fair procedure. A fair procedure would necessarily involve the observation of principles of natural justice. Thus, an adverse order could not be passed against the petitioner without giving ample opportunity of hearing to the petitioner. Admittedly, in the present case, notice was not received by the petitioner till 31.03.2017, i.e., much beyond the period of seven days granted to him for filing his objections. Without noticing the fact that the notice was not duly served upon the petitioner, the re-assessment order has been passed.
Thus, the petitioner has been clearly denied a fair opportunity of hearing by the respondent No.3.
7. Therefore, the assessment order dated 31.03.2017, and consequential demand notice dated 31.03.2017, is set aside. The case is remanded back to the respondent No.3. The respondent No.3 is directed to give ample opportunity of hearing to the petitioner to submit his case. The petitioner shall be free to raise his objections before the respondent No.3 during the hearing proceedings. The respondent No.3 is directed to finalise the re-assessment order within a period of three months from the date of appearance of the petitioner before him.
8. With these directions, the petition is hereby allowed.
Np/-
Sd/- JUDGE