Reasons for non-appearance found to be genuine hence ex-parte assessment order set aside

Atlas Gold Township (India) Pvt. Ltd. Vs State of Kerala (Kerala High Court)

Kerala High Court sets asides the ex-parte impugned assessment order and directs the assessing authority to pass fresh orders as the reasons for non-appearance before AO in response to the notice for hearing are found to be genuine.

Facts- The appellant herein had filed the Writ Petition impugning ex-parte assessment orders passed under the Kerala Value Added Tax Act (KVAT Act) for A.Y. 2013-2014 to 2016-2017. While the assessment orders were passed without affording a reasonable opportunity to the appellant company, the appellant chose to challenge the said assessment orders not only on the ground of violation of the principles of natural justice but also on the larger question as to whether the provisions of the KVAT Act would apply to sustain the assessment in view of the Constitution (One Hundred and First Amendment) Act, 2016, which had introduced a new regime of tax on the supply of goods and services.

Conclusion- Taking note of the said circumstances and finding the reasons for non-appearance of the appellant before the Assessing Officer in response to the notice for hearing to be genuine, we feel that a similar treatment, as extended to the petitioner in WP(C).No.21798 of 2021, can be extended to the appellant herein as well. We, therefore, set aside the impugned judgment of the learned Single Judge in the Writ Petition, as also the order in the Review Petition, to the limited extent that it does not set aside the assessment orders impugned in the Writ Petition. We direct the assessing authority to pass fresh orders of assessment in relation to the appellant for the assessment years 2013-2014, 2014-2015, 2015­2016, 2016-2017, respectively, within a period of three months from the date of receipt of a copy of this judgment. To enable the Assessing Authority to do so, we direct the appellant to appear for a personal hearing before the assessing authority on 17.04.2023. It is made clear that, we have not interfered with that portion of the judgment of the learned Single Judge in the Writ Petition, or the order of the learned single Judge in the Review Petition, that rejects the challenge based on the Constitution (One Hundred and First Amendment) Act, 2016 in relation to the appellant herein.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The appellant herein had filed the Writ Petition impugning Exts.P1 to P4 ex-parte assessment orders passed under the Kerala Value Added Tax Act (hereinafter referred to as ‘the KVAT Act’) for the assessment years 2013-2014 to 2016-2017. While the assessment orders were passed without affording a reasonable opportunity to the appellant company, the appellant chose to challenge the said assessment orders not only on the ground of violation of the principles of natural justice but also on the larger question as to whether the provisions of the KVAT Act would apply to sustain the assessment in view of the Constitution (One Hundred and First Amendment) Act, 2016, which had introduced a new regime of tax on the supply of goods and services. When the matter came up for hearing before a learned Single Judge, the learned Single Judge relied on the decision of the Division Bench of this Court in Sheen Golden Jewels (India) Pvt Ltd. v. State Tax Officer (18)-1, Investigation Branch, Thiruvananthapuram, and others [2019 KHC 205) that had repelled the challenge against the Constitution (One Hundred and First Amendment) Act, 2016 raised by other assessees similarly placed as the appellant. Thereafter, while considering the challenge against the impugned assessment orders, the learned Single Judge relegated the appellant to its alternate appellate remedy under the KVAT Act for an adjudication of the issue on merits.

2. The appellant later came across a judgment of another learned Single Judge in WP(C).No.21798 of 2021 pertaining to a sister company where the learned Judge had considered the argument as regards an ex-parte assessment done against the assessee in that case and had set aside the said assessment and remitted the matter back to the assessing authority for a fresh consideration on merits after finding that the earlier assessment was vitiated by a non-compliance with the rules of natural justice. The appellant, therefore, moved a Review Petition before the learned Single Judge pointing out the sequence of events that led to a quashing of the orders of assessment in respect of the sister company of the appellant and praying for a similar direction with regard to the assessment orders that were impugned in the Writ Petition. The learned Single Judge, however, dismissed the Review Petition after finding no reason to review her earlier judgment in the Writ Petition.

3. In the Writ Appeal before us, the appellant does not challenge the findings of the learned Single Judge as regards the validity of the assessment orders in the wake of the constitutional amendment. The limited prayer at this stage is for a direction similar to the one that was issued in favour of the sister company, whereby another learned Single Judge had set aside the impugned assessment orders that were passed without hearing the assessee and directed the Assessing Officer to re­do the assessment afresh within a time frame.

4. On a consideration of the submission of the learned counsel for the appellant, we find that it is a fact that the judgment of the learned Single Judge in WP(C).No.21798 of 2021 pertained to a sister company of the appellant that was functioning with the same management. It follows, therefore, that the difficulties that were faced by the said sister company were identical to those faced by the appellant as narrated in the statement of facts in the Writ Appeal. Taking note of the said circumstances and finding the reasons for non-appearance of the appellant before the Assessing Officer in response to the notice for hearing to be genuine, we feel that a similar treatment, as extended to the petitioner in WP(C).No.21798 of 2021, can be extended to the appellant herein as well. We, therefore, set aside the impugned judgment of the learned Single Judge in the Writ Petition, as also the order in the Review Petition, to the limited extent that it does not set aside the assessment orders impugned in the Writ Petition. We direct the assessing authority to pass fresh orders of assessment in relation to the appellant for the assessment years 2013-2014, 2014-2015, 2015­2016, 2016-2017, respectively, within a period of three months from the date of receipt of a copy of this judgment. To enable the Assessing Authority to do so, we direct the appellant to appear for a personal hearing before the assessing authority on 17.04.2023. It is made clear that, we have not interfered with that portion of the judgment of the learned Single Judge in the Writ Petition, or the order of the learned single Judge in the Review Petition, that rejects the challenge based on the Constitution (One Hundred and First Amendment) Act, 2016 in relation to the appellant herein.

The Writ Appeal is disposed as above.