GST Assessment Order Set Aside for Lack of Proper Notice; Matter Remanded with Directions to Deposit 10% of Disputed Tax

GST Assessment Order Set Aside for Lack of Proper Notice; Matter Remanded with Directions to Deposit 10% of Disputed Tax

Issue: Whether the assessment order passed under the GST Act is valid when the assessee was not properly informed of the proceedings and was not given a sufficient opportunity to respond, thereby violating the principles of natural justice.

Facts:

• The petitioner, a registered GST assessee, filed returns and paid taxes for the financial year 2019-20.
• The department found discrepancies in the ITC claims based on the filed returns and information in GSTR-01, GSTR-2A, and GSTR-3B.
• An intimation in Form DRC-01 was issued with a notice for a personal hearing on June 6, 2024, followed by two additional hearing notices.
• The petitioner failed to attend the hearings or respond to the notices.
• An assessment order was passed on August 19, 2024, confirming the tax liability.
• The petitioner filed a writ petition against the order, claiming to be unaware of the proceedings as the notices and order were only uploaded on the GST portal and not served through other means like registered post.

Decision:

• The court referred to the case of Sree Manoj International Vs. Deputy State Tax Officer, where the matter was remanded under similar circumstances, requiring the assessee to deposit 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 highlights the importance of ensuring effective communication of notices and orders to assessees in GST proceedings.
• Merely uploading notices and orders on the GST portal may not be sufficient to fulfill the requirement of proper service, especially when it prevents the assessee from being aware of the proceedings.
• The court’s decision to set aside the assessment order and provide the petitioner with another chance to respond upholds the principles of natural justice and ensures fairness in tax proceedings.
• 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.