Petitioner relegated to statutory appeals despite alleged natural justice violation from non-supply of seized files.
Issue
Whether a taxpayer can bypass the statutory appellate remedy and file a writ petition against final assessment orders on the grounds of violation of natural justice due to the non-supply of seized files, when the department asserts those files were not relied upon for the assessments.
Facts
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The petitioner’s business premises were subjected to a search operation by State tax officers covering the tax periods from 2018-19 up to December 2023.
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During the search, tax authorities seized 14 physical files from the petitioner but did not furnish copies of the same to them.
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The petitioner asserted that these seized files contained vital invoices and commercial records necessary to file a comprehensive reply to show cause notices that alleged fraudulent transactions and bogus invoicing.
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The revenue department proceeded to finalize the assessments and passed final assessment orders for all the periods under consideration.
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Notably, the assessment order for the specific period of 2018-19 had already been relegated to an alternative statutory remedy by a prior order of the High Court.
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The department defended the non-supply of the documents by contending that the 14 seized files were never relied upon to formulate the final tax assessments.
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The petitioner approached the High Court via a writ petition, claiming that the withholding of documents caused severe prejudice and violated the principles of natural justice.
Decision
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Held, yes; since final assessment orders have already been formally passed for all relevant tax periods, the petitioner must pursue the standard statutory appeal route instead of seeking extraordinary writ intervention.
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Held, yes; the petitioner is officially relegated to the appellate remedy under section 107, subject to making a conditional pre-deposit of 5% of the principal tax amount.
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Held, yes; the petitioner is explicitly permitted to raise their grievances regarding the withholding of the 14 files and any resulting prejudice directly before the appellate authority.
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Held, yes; the appellate authority is directed to independently evaluate the petitioner’s contentions regarding the missing documentation, completely uninfluenced by any observations made by the High Court.
Key Takeaways
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Writ Jurisdiction Restraint Post-Assessment: Once a show cause notice matures into a final assessment order, High Courts are highly reluctant to entertain natural justice arguments under writ jurisdiction, preferring that the facts be evaluated by an appellate authority.
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Relevance of Non-Relied Documents: While the department may claim it did not rely on certain seized documents, the taxpayer preserves the legal right to argue before the appellate tribunal how those specific files could exculpate them or alter the assessment’s outcome.
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Pre-Deposit Customization: Courts retain the equitable discretion to modulate or lower the standard statutory pre-deposit percentages (such as restricting it to 5% of the principal tax) to ensure the alternative remedy remains financially accessible to an aggrieved assessee.