Ex-parte GST assessment set aside and remanded to grant the assessee a final opportunity to file its reply.

Ex-parte GST assessment set aside and remanded to grant the assessee a final opportunity to file its reply.

Issue

Whether an ex-parte assessment order passed under section 73 can be set aside and remanded via a writ petition on the grounds of natural justice, despite the assessee failing to submit a reply after multiple opportunities during the original proceedings.

Facts

• The petitioner, a registered taxpayer under the Tamil Nadu Goods and Services Tax Act, faced an ex-parte assessment proceeding under section 73.

• The revenue department issued a Show Cause Notice (SCN) alleging certain tax discrepancies.

• In response, the petitioner sought an extension of time to submit its defense by filing Form GST DRC-06.

• The Assessing Officer granted three separate hearing opportunities to the petitioner; however, the petitioner failed to file a written reply or explanation on all three occasions.

• Consequently, the Assessing Officer finalized the assessment ex-parte, confirmed the tax proposals listed in the SCN, and subsequently attached the petitioner’s bank account to recover the dues.

• The petitioner bypassed the standard appellate route and filed a writ petition before the High Court, challenging both the ex-parte assessment order and the consequential bank attachment.

• Before the court, the petitioner raised substantive arguments on the merits of the case and asserted that a substantial amount had already been recovered by the department.

Decision

• Held, yes; because the assessment order was passed ex-parte without any structural consideration of the taxpayer’s defense, granting one final opportunity to the petitioner meets the ends of justice.

• Held, yes; the court ordered that the impugned ex-parte assessment orders be completely set aside and the matter be remanded back to the Assessing Officer for a fresh, de novo decision.

• Held, yes; the remand is subject to the condition that the petitioner must file its detailed reply to the SCN within a strict window of two weeks.

• Held, yes; as a consequence of setting aside the primary tax demand, the bank account attachment was ordered to be lifted immediately, and the writ petition was allowed.

Key Takeaways

• Writ Jurisdiction vs. Statutory Appeal: While alternative appellate remedies exist, High Courts will entertain writ petitions against section 73 orders under Article 226 if a total lack of defense consideration indicates a severe gap in natural justice.

• Conditional Relief for Procedural Lapses: Courts will lean toward protecting an assessee’s right to be heard, but this relief is typically conditional, balancing fairness with revenue interests by enforcing strict timelines for filing the delayed reply.

• Lifting of Attachment Post-Remand: A bank attachment cannot survive independently if the underlying ex-parte tax demand that triggered the recovery action is set aside and restored for fresh adjudication.