2023 (2) TMI 652 - HC - GST

Tax Assessment Nullified: Procedural Flaws Expose Violation of Natural Justice Principles Under TNGST Act, 2017

HC quashed tax assessment orders under TNGST Act, 2017 for violating natural justice principles. The court found procedural irregularities in the order, ... Principles of natural justice - non-speaking order - personal hearing - Section 75(4) of the TNGST Act, 2017 - remand for fresh considerationNon-speaking order - principles of natural justice - Impugned assessment orders are non-speaking for failing to record reasons for rejecting the petitioner's replies. - HELD THAT: - The Court found that the petitioner had submitted detailed replies dated 19.10.2022 to the show cause notices, enclosing supporting bills and return copies, and those replies were acknowledged by the respondent. Despite this, the assessment orders do not state reasons for rejecting those replies or explain why the documents were not accepted. The absence of such reasoning renders the orders non-speaking and constitutes a breach of the duty to apply mind and communicate the basis for an adverse conclusion under principles of natural justice. [Paras 4, 7]Assessment orders quashed insofar as they fail to state reasons for rejecting the petitioner's replies; findings on the objections set aside for fresh consideration.Personal hearing - Section 75(4) of the TNGST Act, 2017 - principles of natural justice - Personal hearing afforded before receipt of the petitioner's replies did not comply with the requirement of Section 75(4) and violated principles of natural justice. - HELD THAT: - The Court relied on the statutory tenor of Section 75(4) which contemplates granting an opportunity of hearing where a written request is received or where an adverse decision is contemplated. A prior decision of this Court was noted holding that a personal hearing issued before receipt of the assessee's explanation cannot satisfy Section 75(4). Here, the respondent afforded personal hearing prior to receiving the replies (which were later acknowledged), and thus did not afford hearing after application of mind to the replies where an adverse view was contemplated. That procedure offended the right to be heard. [Paras 5, 6, 7, 8]Proceedings set aside to the extent that hearing was conducted before consideration of the petitioner's replies; fresh hearing to be afforded after receipt and consideration of replies in accordance with Section 75(4).Remand for fresh consideration - principles of natural justice - Impugned orders quashed and matter remanded for fresh consideration after affording proper hearing and applying mind to the petitioner's replies. - HELD THAT: - Because the orders were non-speaking and hearing was not properly timed, the Court found it necessary to quash the assessment orders and remit the matter to the respondent for fresh adjudication on merits. The respondent is directed to adhere to principles of natural justice, consider the petitioner's replies and supporting documents, afford a personal hearing if an adverse decision is contemplated, and pass a reasoned final order. [Paras 7, 8, 9]Impugned assessment orders quashed and remanded; respondent directed to pass fresh orders after complying with natural justice and affording personal hearing.Final Conclusion: Impugned assessment orders dated 25.10.2022 are quashed for violation of principles of natural justice (non-speaking orders and hearing conducted before replies were considered); the matters are remitted to the respondent to decide afresh on merits after considering the petitioner's replies, affording a personal hearing where an adverse decision is contemplated, and passing reasoned orders within twelve weeks of receipt of this judgment. Issues:Challenge to impugned orders under TNGST Act, 2017 based on violation of principles of natural justice.Analysis:The petitioner challenged orders dated 25.10.2022 under TNGST Act, 2017, alleging violation of natural justice principles. The petitioner contended that the orders were non-speaking, personal hearing was granted before receiving replies, and no reasons were provided for rejecting replies. In responses dated 19.10.2022 to show cause notices, the petitioner clarified no mismatch existed, supported by GST return details and documents. Despite clarifications, the impugned orders lacked reasons for rejecting petitioner's contentions, constituting non-speaking orders.The Court noted that personal hearing was granted to the petitioner before receiving replies, contrary to procedural requirements. Referring to a prior judgment interpreting Section 75(4) of TNGST Act, 2017, the Court emphasized that an opportunity of hearing should follow receipt of a written reply or when an adverse decision is contemplated. The Court found respondent's actions violated natural justice principles by not providing reasons for rejecting objections, granting personal hearing prematurely, and issuing non-speaking orders.Consequently, the Court quashed the impugned assessment orders from 25.10.2022 and remanded the matters to the respondent for fresh consideration within twelve weeks. The respondent was directed to adhere to natural justice principles, provide a personal hearing post-receipt of replies, and issue final orders accordingly. The writ petition was disposed of without costs, and related miscellaneous petitions were closed as per the given directions.