High Court of Tripura:  Assessment proceedings restored on account of inadequate hearing and the assessee granted liberty to appear before the Tribunal and bring necessary documents on record.

ITC Ltd. vs State of Tripura & Ors.; High Court of Tripura at Agartala; W.P.(C) No. 340 of 2021

The petitioner challenged an order passed by the Superintendent of Taxes, Agartala demanding a considerable sum by way of unpaid taxes with interest and penalty for the assessment year 2015-16 under Tripura Value Added Tax Act. The petitioner has also challenged an order passed by the Superintendent of Taxes rejecting the petitioners’ application for rectification of the assessment order.Both the order have been passed on the grounds of breach of principles of natural justice.

Petitioner’s Contention:

The assessment order was passed without completing the hearing of the assessment proceedings. after certain hearings before the Assessing Officer, further hearing was fixed on 23.11.2020. On 23.11.2020, the representative of the petitioner company was present to advance his arguments before the Assessing Officer. However, the Assessing Officer could not conduct the hearing. Thereafter, there was no further communication or notice from the Assessing Officer to the petitioner or its representative till the order of assessment was passed on 26.02.2021.

Further, the Assessing Officer in the impugned order has compared the dealer’s value with “office value” and the difference between two is taken as undisclosed sale value for the purpose of demanding further taxes. This office value was gathered by the Assessing Officer behind the back of the petitioner and utilized in the order of assessment without sharing it with the petitioner.

The Assessing Officer failed to take into account several documents on record and erroneously came to the conclusion that the petitioner had not produced the F-Form along with the return but produced only at the time of the assessment and therefore the same was considered as interstate sale. The Assessing Officer failed to exercise the power of rectification provided under section 74 of the TVAT Act though strong grounds were made out by the petitioner.

Observations and findings:

• It was found that though the Assessing Officer has contended that several notices were sent to the petitioner, there is no evidence of service of any of them. The petitioner has gone on affidavit stating that no such notice was received by the petitioner after 23.11.2020. Even, otherwise, it is difficult to believe that a company which was duly represented by the legal representative virtually on all previous hearing dates would suddenly abandon the assessment proceedings and incur the risk of substantial ex-parte liability arising against it.
• Whether the rules envisage or not, nothing stops the Assessing Officer from dispatching a copy of the notice of hearing through official E-mail address of the assessee company.
• It was held that in facts of the present case in our opinion the assessee deserves an opportunity of making further arguments before the Assessing Officer. This is additionally so, since one of the grounds raised by the petitioner is that several documents of duty paid were already on record which the Assessing Officer has ignored, possibly because the representative of the petitioner was not present at the last date of hearing to clarify these aspects.
• As noted, the case of the department appears to be that office value is nothing but the value of the goods indicated in the transport permit granted from time to time. If that be so, surely the petitioner cannot claim surprise about the contents of such permits granted by the department. However, if the department wishes to rely upon any other documents or material which is not within the knowledge or possession of the petitioner, the principles of natural justice require that the same must be provided to the petitioner before it can be used against it.
• The stand of department was not appreciated that even during the time when the Corona Virus was at its peak, the administrative and legal representatives of the assessee company must appear before the Assessing Officer physically for conducting the hearings. Insisting on personal hearing would either expose the representatives to catching infection or force the Assessing Officer to adjourn the hearings resulting into delays.
• In the present case, however, in the interest of justice, virtual hearing was permitted . This is so for the reason that the petitioner is a company whose Head Office is registered at Kolkata. Its representatives such as accountants and legal representatives would have to travel long distances to appear before the Assessing Officer and it is not certain that such hearing could be concluded in one day.
• Since the impugned assessment order was quashed on the ground of inadequate hearing, it was not necessary to examine the legality of the order passed by the Assessing Officer on rectification application.

Held:

The impugned order was set aside. Resultantly, the order rejecting the petitioner’s application for rectification does not survive. And the assessment proceedings are revived and restored to file of the assessing officer.