GST assessment order quashed for denying hearing opportunity and withholding SIB report under Section 75(4) UP GST Act

HC quashed GST assessment order dated 24.01.2022 for violating natural justice principles. The order was passed ex-parte without providing SIB report to petitioner or granting hearing opportunity under Section 75(4) of UP GST Act. Court held that search and seizure under Section 67 and scrutiny under Section 61 are preliminary steps toward proceedings under Sections 73/74, not conclusive proof of tax evasion. Department must establish non-payment through corroborative evidence beyond mere discrepancies found during inspection. Matter remanded to adjudicating authority for fresh proceedings after supplying SIB report and providing hearing opportunity.

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Issues involved:
The judgment involves challenges to orders passed under Section 74 of the U.P. G.S.T. Act, specifically focusing on dismissal of delay condonation application and appeal on grounds of limitation. The key contention is the validity of the ex-parte order dated 24.01.2022 based on a SIB report without providing necessary documents to the assessee and without a proper opportunity of hearing.

Challenges to appellate orders:
The counsel for the petitioner argued that the appellate authority erred in dismissing the delay condonation application, but requested the court to consider challenging the order dated 24.01.2022 on grounds available for judicial review under Article 226 of the Constitution of India. The appellate order was dismissed for being beyond the limitation prescribed under Section 104(4) of the U.P. G.S.T. Act, which was upheld based on established legal principles.

Validity of ex-parte order:
The petitioner, an assessee under the U.P. G.S.T. Act, claimed that the proceedings initiated against them were solely based on a SIB report without providing necessary documents or a fair opportunity of hearing. It was argued that the order dated 24.01.2022 lacked essential procedural fairness, as the petitioner was not supplied with the SIB report or given a chance to respond adequately.

Legal principles and procedural requirements:
The judgment emphasized that the power to assess non-payment of tax or wrong availment of input tax credit must be supported by relevant evidence and compliance with statutory provisions. Sections 61 and 67 of the Act serve as initial steps and do not alone establish tax evasion. Section 74 empowers assessment for tax evasion due to fraud or wilful misstatement, with the burden of proof on the department to establish non-payment and intent to evade tax.

Insufficiency of evidence and procedural lapses:
The court highlighted that discrepancies found during inspection or scrutiny must be substantiated with corroborative evidence before levying tax. The department must follow due process, including providing relevant documents to the assessee and granting a fair opportunity of hearing as mandated by Section 75(4) of the Act.

Judgment and remand:
Considering the procedural deficiencies and lack of evidence beyond the SIB report, the court quashed the order dated 24.01.2022 and remanded the matter to the adjudicating authority. The direction was to provide the SIB report to the petitioner, allow a hearing, and permit the filing of a reply before passing a fresh order. Both writ petitions were allowed based on this decision.

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