High Court quashes assessment despite missed hearings; imposes ₹1 Lakh cost on Senior Citizen

Issue

Whether an assessment order passed ex parte due to the assessee’s repeated failure to attend personal hearings can be quashed when the default is attributed to severe medical issues (acute kidney condition), and whether costs should be imposed for the procedural delay.

Facts

• The Demand: The Department passed an Order-in-Original demanding ₹97.5 lakhs plus interest against the assessee for the financial year 2019-20.

• Procedural Default: The assessee failed to attend multiple personal hearings despite receiving due notices.

• Assessee Profile: The petitioner is a Senior Citizen and the sole proprietor of an LPG dealership with HPCL.

• Justification: The assessee pleaded that he had been suffering from an acute kidney condition since 2022, which prevented him from participating in the proceedings.

• Legal Context: The dispute involved challenges linked to GST Notification Nos. 9/2023-CT and 56/2023-CT, requiring adjudication on substantive merits.

Decision

• Substantive Justice: Relying on the precedent in Sugandha Enterprises, the Court held that matters involving substantial tax liability should be decided on their merits rather than being dismissed on technical grounds of non-appearance, provided a reasonable cause exists.

• Medical Leniency: The Court accepted the medical justification (kidney condition/senior citizen status) and noted there was no deliberate intent to evade proceedings.

• Conditional Relief: While the Court quashed the Order-in-Original to allow a fresh hearing, it viewed the repeated non-appearance seriously.

• Imposition of Costs: As a condition for setting aside the order, the Court imposed a cost of ₹1 Lakh on the assessee, to be paid to the Delhi High Court Bar Association (DHCBA) within two weeks.

• Remand: Upon payment of costs, the matter is remanded to the Adjudicating Authority for a fresh decision on merits.

Key Takeaways

Merit over Technicality: High Courts prefer that tax disputes, especially those involving large sums (₹97.5 lakhs), be resolved on their factual and legal merits rather than confirmed solely due to the assessee’s procedural default.

Costs as a Balancing Tool: While Courts grant relief on humanitarian grounds (illness/age), they impose significant monetary costs (e.g., ₹1 Lakh) to penalize the taxpayer for wasting judicial and departmental time and to deter casual non-compliance.

Health as “Sufficient Cause”: Chronic or acute medical conditions, especially for senior citizens/sole proprietors, are generally accepted as valid grounds to condone non-appearance in GST proceedings.