CA Vinod Kaushik
In recent time Delhi VAT Department has started to issue system based default assessment notices and its consequential demand notices for tax, interest and penalties. The above notices are served through the login id of dealers and service of the same is assumed in law once we read the notice a system generated SMS is also sent on the registered mobile no. of the dealer. In this article an attempt has been made to decode the order delivered by Delhi High Court in case of M/s Bhumika Enterprises (W.P. (C) 7379/2015 and CM No. 13592/2015) dated 28th August 2015.
Violation of principal of natural justice:
In this particular case department issued system generated notices for default assessment on 19-06-2015 and asks the dealers to produce all the documents by 26-06-2015. Without waiting for 26-06-2015 assessments (system generated) were framed on very same day i.e. 19-06-2015 stating that the dealer has not produced any documents in response to the above said notice. The notices, assessment orders were not subject to human intervention at any point of time which clearly shows the gross violation of principal of natural justice.
Draconian circular dated 29-07-2015 is also quashed:
On 29-07-2015 the department issued a circular stating the schedule of system generated orders for various defaults made by the dealers. Out of all the defaults one of the issue was late filing of return for the year 2015-16 of 4th quarter and the assessment shall be done for above default by 30-09-2015. The due date of filing of return for 4th quarter of 2015-16 falls in 2016 i.e. on 28th April 2016 which clearly shows extent of mindless circulars are being issued by DVAT department. On the said reasons the above circular was quashed by Hon’ble Delhi High Court with an advice to not issue this kind of mindless orders in future.
Important take out from the order of Delhi High Court:
The notices issued under section 59(2) on 19-06-2015 which were system generated stands quashed, the consequent orders passed on 17-07-2015 were already withdrawn by the Department suo moto and circular dated 29-07-2015 which was not uploaded on website of DVAT department stands quashed. The suggestion was delivered to issue fresh notice after application of mind by the concerned VATO which shall be properly served on the dealers and assessments shall be framed after giving proper opportunity of being heard.
Department has issued CIRCULAR NO. 24 of 2015-16 dated 10.09.2015 accepting the high Court Direction.
Setback for DVAT department:
System bases notices and its consequential demands have been strongly opposed by judiciary and that too for a valid reason. The notice issued must have a proper application of mind and also provide a reasonable opportunity of being heard to dealers. The issuance of system based notices and making of assessments by system shows the promptness to recover taxes but denial of justice to dealers.
There are many other cases pending at OHA level in the VAT department which are in the same line where opportunity was not accorded to dealers. The same objections must be disposed by the department following the order of Delhi High Court in true spirit and avoid to issue any such notices. We hope that the department will issue proper advisory to its officers to make assessments by proper application of mind and by giving proper opportunity of being heard.
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