GST Assessment Order Set Aside for Non-Service of Notice and Lack of Opportunity
Summary in Key Points:
- Issue: Whether a GST assessment order is valid when the show cause notice (SCN) and the order itself were not properly served on the assessee, denying them an opportunity to respond and explain discrepancies.
- Facts: The assessee challenged an assessment order, claiming that the SCN and the order were not served on them but were instead uploaded on the GST portal under the “view additional notices and orders” tab. The assessee argued that they were unaware of the proceedings and requested an opportunity to explain the discrepancies.
- Decision: The High Court set aside the assessment order, acknowledging that the assessee may not have been aware of the notices and orders on the portal. The court directed that the impugned order be treated as a show cause notice, granting the assessee an opportunity to respond.
Decision:
The High Court ruled in favor of the assessee, setting aside the impugned assessment order. The court emphasized the following:
- Non-Service of Notice: The assessee’s claim of being unaware of the notices and orders on the GST portal was considered plausible.
- Violation of Natural Justice: The court recognized that denying the assessee an opportunity to be heard and respond to the allegations violated the principles of natural justice.
- Opportunity to Respond: The court directed that the impugned order be treated as a show cause notice, granting the assessee a chance to file a reply and explain the discrepancies.
- Fairness and Transparency: This decision ensures that the assessee is given a fair opportunity to present their case and ensures transparency in the GST proceedings.
Important Note: This case highlights the importance of ensuring effective communication and providing a fair opportunity of hearing to assessees in GST proceedings. While uploading notices and orders on the GST portal is a valid method of service, it is crucial to ensure that assessees are aware of these communications. The High Court’s decision emphasizes the need to prioritize the principles of natural justice and provide taxpayers with a reasonable chance to respond to any demands or notices issued against them.
HIGH COURT OF MADRAS
Tvl. Jayam Sai Concrete Works
v.
State Tax Officer Investigation Gr-I
J. SATHYA NARAYANA PRASAD, J.
W.P.No.37384 of 2024
W.M.P.Nos.40392 and 40393 of 2024
W.M.P.Nos.40392 and 40393 of 2024
DECEMBER 9, 2024
Ms. R. Hemalatha, for the Petitioner. T.N.C. Kaushik, Addl. Govt. Pleader (Tax), for the Respondent.
ORDER
1. Mr.T.N.C Kaushik, learned Additional Government Pleader (Tax) takes notice on behalf of the respondent. With the consent of both parties, this writ petition is taken up for final disposal at the admission stage itself.
2. The present writ petition is filed challenging the impugned order passed by the respondent dated 30.08.2024 relating to the assessment year 2019-20.
3. The petitioner is engaged in a wholesaler/distributor of cement products. The petitioner is a registered dealer under Goods and Services Act, 2017. During the course of Audit Inspection conducted on 24.03.2023, the officers had verified the documents and records filed by the petitioner for FY 2019-20 and had found certain discrepancies as follows:
| (a) | Non-filing of returns in FORM GSTR 9 & 9C (Defect No.1) |
| (b) | Non-payment of tax under RCM for the freight charges (Defect No.2) |
| (c) | Non-Generation of outward E-way bills (Defect No.3) |
4. Learned counsel appearing for the petitioner submitted that the petitioner was served with a notice in FORM GST DRC 01A dated 23.04.2024 intimating the tax liability to the tune of Rs.46,216/- (CGST: Rs.23,108/- and SGST: Rs.23,108/-) and penalty of Rs.2,92,68,594/- (CGST: Rs.1,46,34,297/- and SGST: Rs.1,46,34,297/-) by the State Tax Officer (Int.), Inspection Group VI, Erode, for the tax and penalty was already paid before the issuance of the above said notice except to the defect no.3 (NonGeneration of outward E-way bills). Subsequently, the said Inspection Officer had issued a show cause notice in FORM GST DRC 01 dated 11.05.2024 imposing only the penalty of Rs.2,92,18,594/- (CGST: Rs.1,46,09,297/- and SGST: Rs.1,46,09,297/-) whereas in the detailed SCN, the officer had also proposed tax of Rs.46,216/- (CGST: Rs.23,108/- and SGST: Rs.23,108/-) along with penalty.
5. It is submitted by the learned counsel for the petitioner that the petitioner had filed a reply dated 05.06.2024 and had paid the tax liability through DRC 03 challan immediately after the inspection was conducted. Thereafter, the respondent had issued three reminder notices vide ref nos.ZD330724088013J dated 08.07.2024, ZD330724228383G dated 19.07.2024, ZD3308240289347 dated 05.08.2024 along with the opportunity of personal hearing. However, the petitioner has not availed the opportunity of personal hearing. Hence the impugned order came to be passed.
6. Learned counsel contended that three reminder notices have not been served on the petitioner by tender or sending it by RPAD, instead it had been uploaded under the field “Additional Notices and Orders” tab on the GST Portal, thereby, the petitioner was unaware of the initiated proceedings and was thus unable to participate in the adjudication proceedings. It is submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, they would be able to explain the alleged discrepancies.
7. The learned counsel for the petitioner would then place reliance upon the recent judgment of this Court in the case of M/s.K.Balakrishnan, Balu Cables v. O/o. the Assistant Commissioner of GST & Central Excise in W.P.(MD)No.11924 of 2024 dated 10.06.2024. It was further submitted that the petitioner is ready and willing to pay 25% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal. It is further submitted that the petitioner had already paid the tax and penalty before the issuance of the above said notice, except for defect No.3 (Non-Generation of outward Eway bills), immediately after the inspection was conducted.
8. The learned counsel for the petitioner would submit that they would pay the balance remaining out of the 25% after deducting the monies which is stated to have been paid, which was not objected to by the learned Additional Government Pleader for the respondent who would seek the liberty of this Court to verify if the above statement is correct.
9. In view thereof, the impugned order passed by the respondent dated 30.08.2024 is hereby set aside and this Court is inclined to pass the following orders:
| (a) | It is open to the respondent to verify the above statement. If on such verification the above statement is correct the petitioner would be intimated within a week from the date of receipt of a copy of this order by the respondent authority and the petitioner shall deposit the balance amount out of 25% of the disputed taxes within a week of such intimation. |
| (b) | However, if on verification it is found that the above statement is incorrect the same would be intimated to the petitioner within a week from the date of receipt of a copy of this order and the petitioner would pay 25% or balance of the disputed taxes within a week of such intimation. |
| (c) | On complying with the above conditions, the impugned order of assessment shall be treated as show cause notice and the petitioner shall file their objections within a period of four weeks from the date of receipt of a copy of this order. |
| (d) | If any such objections are filed within the stipulated period, the respondent shall consider the same and pass appropriate orders in accordance with law after affording the petitioner a reasonable opportunity of hearing. |
| (e) | If objections are not filed within the stipulated period i.e., four weeks from the date of receipt of a copy of this order or if deposit of 25% is not made within the stipulated period, if not already paid, the impugned order of assessment shall stand revived. |
Accordingly, the Writ Petition stands disposed of with the above observations and directions. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.