Fortuna Projects vs The Deputy Commissioner of Commercial Taxes (Audit-1.3)

B.V. Nagarathna, J.—Petitioner has assailed order dated 20-2-2014 passed by the respondent-Deputy Commissioner of Commercial Taxes (Audit), which is stated to be one under sub-section (1) of Section 39 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as "the Act"), but in substance, it is under sub-section (2) of Section 39 thereof. Briefly stated the facts are that, initially an order under sub-section (1) of Section 39 of the Act had already been passed by the respondent, which is the order of reassessment. Thereafter, notice under sub-section (2) of Section 39 of the Act was issued to the petitioner on the basis of certain reports received by the respondent. In response to that, the petitioner has given its reply as per Annexure-E. The respondent has, thereafter recorded that in response to the notice dated 13-1-2014, the petitioner has neither replied nor appeared or filed any objection with regard to the proposed levy of tax and accordingly, proceeded to pass the impugned order. According to the learned Additional Government Advocate, that order is under sub-section (2) of Section 39 of the Act, though titled as being one under sub-section (1) of Section 39 of the Act.

I have heard the learned Counsel for the petitioner and learned Additional Government Advocate for respondent and perused the material on record.

It is admitted that notice was issued to the petitioner under sub-section (2) of Section 39 of the Act. In response to that, the petitioner has stated that there was already an order of reassessment and therefore, fresh proceedings were unnecessary. But the fact remains that no reply to the notice was submitted by the petitioner. Virtually, an ex parte order has been passed by the respondent, which is wrongly titled as one under sub-section (1) of Section 39 of the Act which in essence is under sub-section (2) of Section 39 of the Act. Having regard to there being an apparent confusion in the entire proceedings and the petitioner not having an opportunity to give reply to the notice issued under sub-section (2) of Section 39 of the Act, in the interest of justice, an opportunity ought to be given to the petitioner to give reply to the notice and after hearing the petitioner, the respondent to pass a fresh order under sub-section (2) of Section 39 of the Act.

In the circumstances, the impugned order at Annexure-F is quashed. The petitioner is at liberty to file its reply or objections to the notice issued under sub-section (2) of Section 39 of the Act on or before 7-7-2014. If such a reply is filed, the respondent to give an opportunity of being heard to the petitioner and to dispose of the proceedings in accordance with law. All contentions on both sides are left open. With the aforesaid observations and directions, the writ petitions stand disposed.