GST Assessment Order Set Aside for Lack of Proper Hearing; Matter Remanded back subject to deposit of 10% of disputed tax.

Issue: Whether the assessment order passed under the GST Act is valid when the assessee was not granted a reasonable opportunity of hearing, thereby violating the principles of natural justice.

Facts:

The petitioner, a registered GST assessee, received an intimation (DRC-01) and subsequent reminders regarding discrepancies in their returns for 2019-20.
The petitioner was unaware of these communications as they were only uploaded on the GST portal.
A show cause notice (DRC-01) was issued through RPAD on August 22, 2024.
However, the respondent passed the assessment order on August 28, 2024, just six days later, without granting a personal hearing to the petitioner.
The petitioner filed a writ petition against the assessment order, alleging a violation of natural justice due to the lack of a proper hearing.

Decision:

The court referred to the case of Sree Manoj International Vs. Deputy State Tax Officer, where the matter was remanded under similar circumstances, subject to the assessee paying 10% of the disputed tax.
In the present case, the petitioner expressed willingness to pay 10% of the disputed tax.
The court set aside the impugned assessment order.
The court directed that upon payment of 10% of the disputed tax, the impugned order should be treated as a show cause notice.
The petitioner was granted an opportunity to submit their objections within a specified time.

Key Takeaways:

This case reinforces the importance of granting a proper opportunity of hearing to assessees before passing assessment orders under the GST Act.
The court’s decision to set aside the assessment order and provide the petitioner with another chance to respond to the show cause notice upholds the principles of natural justice.
The case also highlights the need for authorities to ensure effective communication of notices and intimations to taxpayers, especially when discrepancies are found in their returns.
The reliance on the Sree Manoj International case provides consistency in judicial approach and offers a practical solution by allowing the assessee to participate in the proceedings while safeguarding the revenue’s interest.

Sri Pratyangira Logistics

State Tax Officer

Mohammed Shaffiq, J.

W.P. No. 38791 of 2024
W.M.P. Nos. 42003 and 42005 of 2024

DECEMBER 19, 2024

K. Siri Chandana for the Petitioner. Ms. Amrita Dinakaran, Govt. Adv. for the Respondent.

ORDER

1. The present writ petition is filed challenging the impugned order in Ref.No.ZD330824253921B dated 28.08.2024, passed by the respondent on the premise that the same was made in violation of principles of natural justice.

2. It is submitted by the learned counsel for the petitioner that the petitioner is engaged in the business of supplying services for transport agency and is registered under the GST Act. During the relevant period of 2019-20, the petitioner had filed the returns and paid appropriate taxes. However, on examination of the information furnished in the return the following discrepancies were found:

(i)

Discrepancy between GSTR 3B and GSTR 1

(ii)

Discrepancy between GSTR 3B and GSTR 2A

(iii)

Under declaration of Ineligible ITC

3. It is submitted by the learned counsel for the petitioner that an intimation in Form DRC01 was issued on 23.05.2024 followed by 3 reminders viz., 01.07.2024, 17.07.2024 and 08.08.2024. However, the petitioner had not responded to any of the above notices / intimation as neither the show cause notices nor the impugned order of assessment has been served on the petitioner by tender or sending it by RPAD, instead it had been uploaded under “view additional notices and orders” column of the GST Portal, thereby, the petitioner was unaware of the initiated proceedings. Thereafter, another show cause notice in Form DRC-01 dated 22.08.2024 was issued to the petitioner through RPAD and the respondent proceeded to pass the impugned order dated 28.08.2024 within 6 days from the issuance of DRC 01 through RPAD, thus the petitioner was unable to participate in the adjudication proceedings or avail the opportunity of personal hearing. It is submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, he would be able to explain the alleged discrepancies.

4. The learned counsel for the petitioner would place reliance upon the recent judgment of this Court in the case of Sree Manoj International v. Deputy State Tax Officer in W.P.No.10977 of 2024 dated 25.04.2024, to submit that this court has remanded the matter back in similar circumstances subject to payment of 10% of the disputed taxes.

5. It was further submitted that the petitioner is ready and willing to pay 10% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Government Advocate appearing for the respondent does not have any serious objection.

6. By consent of both parties, the writ petition stands disposed of on the following terms:

(a)

The impugned order dated 28.08.2024 is set aside

(b)

The petitioner shall deposit 10% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order.

(c)

If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted from/towards the 10% of disputed taxes directed to be paid. The assessing authority shall then intimate the balance amount out of 10% of disputed taxes to be paid, if any, within a period of one week from the date of receipt of a copy of this order. The petitioner shall deposit such remaining sum within a period of three weeks from such intimation.

(d)

The entire exercise of verification of payment, if any, intimation of the balance sums, if any, to be paid for compliance with the direction of payment of 10% of the disputed taxes, after deducting the sums already paid and payment by the petitioner of the balance amount, if any, on intimation in compliance of the above direction shall be completed within a period of four weeks from the date of receipt of copy of this order.

(e)

Failure to comply with the above condition viz., payment of 10% of disputed taxes within the stipulated period i.e., four weeks from the date of receipt of a copy of this order shall result in restoration of the impugned order.

(f)

If there is any recovery by way of attachment of Bank account or garnishee proceedings, the same shall be lifted /withdrawn on complying with the above condition viz., payment of 10% of the disputed taxes.

(g)

On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. It is made clear that if the above conditions viz., 10% of disputed taxes is not complied or objections are not filed within the stipulated period, four weeks respectively from the date of receipt of a copy of this order, the impugned order of assessment shall stand restored.

7. Accordingly, the Writ Petition stands disposed of. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.