Chandra Prakash Mishra vs Flipkart India Private Limited & Others
Facts of the case
The appellant, Chandra Prakash Mishra, a Joint Commissioner of Commercial Tax in Moradabad, challenged the orders passed by the High Court of Allahabad in multiple writ petitions filed by Flipkart India Private Limited. The dispute arose from tax assessment proceedings conducted under the Uttar Pradesh Value Added Tax Act, 2008 (UP VAT Act) while the appellant was serving as the Deputy Commissioner, Commercial Tax, Noida.
The core issue was the legality of ex parte provisional tax assessment orders passed against Flipkart by the appellant, as the Assessing Authority. Flipkart had shifted its business operations from Noida to Ghaziabad, but the tax department continued sending notices to its Noida address. The assessment order dated 15.12.2015 was passed without proper notice, leading to recovery of ₹49.82 crores from Flipkart's bank account.
Flipkart challenged:
1. The assessment order dated 15.12.2015 as being passed without valid service of notice.
2. The recovery of ₹49.82 crores from its bank account without legal authority.
3. The denial of registration of its changed business address in Ghaziabad.
The High Court ruled in favor of Flipkart, setting aside the tax assessment and ordering the refund of the recovered amount with interest. The Court also imposed a cost of ₹2,00,000 on the tax department and directed an inquiry against the erring officers.
Despite this ruling, the appellant passed another tax assessment order on 04.05.2016, again at the Noida address. Flipkart filed another writ petition, leading the High Court to:
1. Stay the second assessment order.
2. Impose an additional fine of ₹50,000 on the appellant personally.
3. Direct departmental action against the appellant for his conduct.
The appellant apologized before the High Court but challenged the adverse remarks and financial penalties imposed on him before the Supreme Court.
Issues
1. Whether the appellant’s ex parte tax assessment orders violated principles of natural justice due to improper service of notice.
2. Whether the High Court was justified in imposing personal costs and recommending departmental action against the appellant.
3. Whether the UP VAT authorities acted arbitrarily in refusing to register Flipkart’s change of business address.
4. Whether the appellant’s actions were in bad faith or mere procedural errors.
Relevant Articles and Laws
1. Article 14 of the Constitution of India – Right to equality and protection against arbitrary state action.
2. Article 19(1)(g) of the Constitution of India – Right to practice trade or business freely.
3. Uttar Pradesh Value Added Tax Act, 2008 (UP VAT Act) – Governs VAT taxation, assessment, and procedural compliance.
4. Section 67 of the UP VAT Act – Grants statutory protection to tax officers for actions done in good faith.
5. Principles of Natural Justice – Requirement of proper notice and an opportunity to be heard before passing an order.
Judgment
The Supreme Court ruled in favor of the appellant, setting aside the High Court’s strictures, penalties, and disciplinary recommendations, holding that:
1. The appellant’s actions, though erroneous, were not malicious. The Court observed that every illegal or incorrect decision does not automatically imply bad faith.
2. The High Court’s remarks against the appellant were unnecessary. Since he was not personally impleaded in the first two writ petitions, adverse personal findings against him without giving him a chance to defend himself violated due process.
3. Ex parte tax assessments were wrongly conducted, but Flipkart’s own delay in registering its address change contributed to the confusion.
4. The ₹2,00,000 fine imposed on the tax department should be refunded to the State Legal Services Authority, as Flipkart voluntarily waived its claim to the penalty amount.
5. All personal remarks and disciplinary directions against the appellant were annulled.
The Supreme Court emphasized that courts should not “crack the whip” on every mistake and that errors in administrative functions should be handled with persuasive reasoning rather than harsh punishments.
-ADITYA
DSNLU
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