2023 (2) TMI 1086 - HC - GST

Tax Assessment Overturned: Procedural Fairness Prevails, Order Quashed Due to Natural Justice Violations and Insufficient Hearing

M/s. Balram Singh Versus Union of India and Others

HC quashed ex parte summary assessment orders imposing tax liability of Rs. 10,06,826. The court found violations of natural justice principles, lack of ... Validity of summary assessment orders - ex-parte assessment order - no sufficient opportunity of hearing granted - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, it is opined that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. The impugned orders are set aside - petition disposed off. Issues Involved: 1. Challenge to summary assessment orders dated 16.02.2020 and 18.02.2020 2. Rejection of input tax credit claim and imposition of tax liability 3. Violation of principles of natural justice and ex parte order Analysis:Challenge to Summary Assessment Orders: The petitioner sought relief by praying for the quashing of summary assessment orders dated 16.02.2020 and 18.02.2020, which imposed a total liability of Rs.10,06,826. The High Court noted that the orders were passed ex parte without providing sufficient time for the petitioner to represent their case. The court found that the orders lacked clear reasons for determining the amount due and payable by the assessee. Consequently, the court quashed and set aside the impugned orders, emphasizing the violation of principles of natural justice.Rejection of Input Tax Credit Claim: The assessment orders rejected the input tax credit claim of the petitioner and imposed a tax liability of Rs. 10,06,826. The court observed that the orders were passed without affording the petitioner a fair opportunity of hearing and were ex parte in nature. The court highlighted that the lack of sufficient reasons in the orders, coupled with the civil consequences of such actions, warranted interference by the court. As a result, the court directed the petitioner to deposit twenty percent of the demand raised before the Assessing Officer within four weeks, without prejudice to the rights of the parties.Violation of Principles of Natural Justice and Ex Parte Order: The High Court emphasized the importance of adhering to principles of natural justice and fair opportunity of hearing in administrative proceedings. The court noted that the ex parte nature of the assessment orders, combined with the absence of clear reasons, necessitated intervention by the court. The court directed the Assessing Authority to decide the case on merits after affording adequate opportunity to all concerned parties and complying with the principles of natural justice. Additionally, the court instructed that no coercive steps should be taken against the petitioner during the pendency of the case, highlighting the need for procedural fairness in tax assessments.In conclusion, the High Court intervened in the matter due to the procedural irregularities in the assessment orders, emphasizing the significance of natural justice and fair hearings in administrative actions. The court's directions aimed to ensure a just and transparent resolution of the tax dispute, underscoring the importance of procedural safeguards in such matters.