NEW DELHI
The Bombay High Court, in the case of Kalpataru Power Transmission Ltd. vs State Of Maharashtra, has quashed a review order against Kalpataru Power Transmission. This order had previously disallowed the works-contract deductions beyond the Show Cause Notice (SCN).
Justices G. S. Kulkarni and Jitendra Jain observed that the review order blatantly breached the principles of natural justice and was issued without jurisdiction. Thus, the court entertained the plea.
In this case, the petitioner (or assessee) executed two electricity distribution line projects for the Maharashtra State Electricity Distribution Company Limited (MSEDCL), claiming the mentioned deductions.
The department issued a show cause notice to review the assessment order, arguing that the deductions, as detailed under Rule 58 concerning profit from the supply of labour and services, had been inappropriately granted by the court.
The assessee responded by reiterating its detailed submissions made previously. They argued that the assessing officer had verified the facts during the assessment proceedings and approved the deduction. Nevertheless, a subsequent order by the department, as outlined in Section 25 of the MVAT Act, dismissed the assessee’s submissions. The department held that because the assessee did not correctly submit the deduction amount, they were not qualified for the deductions as stated under Rule 58(1)(a) to (h) of the Act.
The assessee argued that the department’s decision to pass the review order was against natural justice principles. They further asserted that although an alternative remedy exists under the MVAT Act, their petition remains valid under Article 226 of the Indian Constitution.
The department contended that it had considered the conditions in the proviso to Rule 58 before implementing the rates in the table under Rule 58. It argued that it had the correct jurisdiction to pass an order under Section 25 of the MVAT Act.
The court noted that if an authority’s action is either wholly without jurisdiction or opposes natural justice principles, a writ petition would be maintainable, and petitioners shouldn’t be directed to an alternative remedy.
The court recognized the assessee’s challenge to the review, based on the violation of natural justice principles. The challenge claims that the order was passed without satisfying the pre-condition needed to exercise the review power under Section 25 of the MVAT Act and Rule 58(1) of the MVAT Rules.
Counsel Nikita Badheka represented the appellant, while Counsel Dushant Kumar represented the respondent.