Dual Assessment Orders for the Same Period Quashed: Consolidated Adjudication Ordered

Dual Assessment Orders for the Same Period Quashed: Consolidated Adjudication Ordered

Issue

Whether two different GST officers can pass separate adjudication orders for the same tax period (FY 2020-21) and whether an assessee is entitled to a consolidated hearing if they have already discharged a part of the tax liability under the first order.

Facts

• The Conflict: For the FY 2020-21, the assessee was subjected to two parallel proceedings. Consequently, two different officers passed two separate adjudication orders raising demands for the same period.

• Assessee’s Compliance: The assessee submitted that they had already acted upon the first demand. They had paid the full tax liability (including penalty) for IGST and CGST, and a significant portion of the SGST for that specific period.

• The Grievance: The issuance of multiple orders for the same period creates a situation of double taxation and procedural chaos, as the assessee cannot be expected to defend the same set of transactions before different authorities separately.

Decision

• Balancing Interests: The High Court (Madras) observed that having multiple orders for a single tax period is legally unsustainable and prejudicial to the taxpayer. To balance the interests of both the Revenue and the Assessee, the Court decided to reset the process.

• 25% Pre-deposit: As a condition for granting relief and remanding the matter, the Court directed the assessee to deposit 25% of the disputed tax amount.

• Consolidated Adjudication: The Court set aside the impugned orders and remitted the case back to the Adjudicating Authority. The authority was directed to pass a single, consolidated order on merits after giving the assessee a fair opportunity to be heard and considering the taxes already paid.

Key Takeaways for Taxpayers

• Section 6 Protection: Under Section 6(2)(b) of the CGST Act, if a State officer has initiated proceedings on a subject matter, a Central officer cannot initiate parallel proceedings on the same matter (and vice-versa).

• One Period, One Order: Tax periods (monthly or annual) are treated as distinct units. Once an order is passed for a period, any subsequent discovery of tax escape should ideally be handled via Rectification (Section 161) or Re-assessment, not by a parallel second order from a different officer.

• Remand with Conditions: Courts often use the “Pre-deposit” mechanism (10% to 25%) to ensure that the assessee is serious about the merits of the case before quashing a demand and sending it back for fresh trial.

• Payment Credit: If you have paid tax against one notice, ensure you carry the Form DRC-03 or the payment challan to the second officer immediately to prevent duplicate demands.