While quashing the Assessment order against the Infosys Ltd, the High Court of Telangana held that proper opportunity was denied to the petitioner to represent its case and there has been a violation of principles of natural justice inasmuch as personal hearings were fixed for the first time during COVID-19 lockdown, disabling the petitioner and causing serious prejudice to the petitioner.
The petitioner is a Company engaged in the sale of Software and the provision of IT services. It filed its returns under the VAT Act and CST Act reporting the turnovers and paying applicable tax.
The petitioner for the year 2015-16 under the CST Act reported the turnovers; that the exports are not liable to tax under the CST Act; and that the inter-State sales of software is shown as Rs.39,47,93,331/- and tax at 5% was paid thereon.
The respondent authority took up the assessment of the petitioner for the year 2015-16 and issued a show-cause notice by email adopting the turnovers which represent the highest figure between the CST returns/waybills and the TINXSYS records for the year 2015-16.
Petitioner contended that the respondent authority adopted the gross turnover and proposed to levy a tax on the entire turnover without considering the exemptions claimed towards direct exports, branch transfer, and CST collections under the CST Act.
The petitioner requested orally on phone to postpone the personal hearing due to lockdown announced by the Government of Telangana and Government of India due to the outbreak of COVID-19.
The Commercial Taxes authority contended that the petitioner was given the reasonable opportunity by the respondent authority and in any event, the petitioner has a remedy of appeal under the CGST Act which the petitioner ought to avail.
The division bench of Justice M. S. Ramachandra Rao and K. Lakshman held that proper opportunity was denied to the petitioner to represent its case and there has been a violation of principles of natural justice inasmuch as personal hearings were fixed for the first time during COVID-19 lockdown, disabling the petitioner and causing serious prejudice to the petitioner.
“The existence of alternative remedy of appeal available to the petitioner to challenge the impugned order of Assessment dated 31.03.2020 cannot be a bar for the petitioner to avail the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India,” the bench said.
The bench in the light of the observation remitted back the matter to the respondent to consider the matter afresh after giving personal hearing to the petitioner and to decide within a period of two months.
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