Tax Assessment Voided: Jurisdictional Defect Invalidates Proceedings Under Statutory Procedural Requirements

HC allowed writ petition challenging tax order under U.P. GST Act. The court set aside the tax assessment order and related notices due to lack of jurisdictional basis after the First Appellate Authority previously set aside the foundational order. The ruling emphasized that without valid jurisdictional facts, the tax proceedings were unsustainable.

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Issues involved:
The issues involved in this case include the imposition of tax, interest, and penalty under Section 74(9) of the U.P. GST Act, the enforcement of the rule of alternative remedy, the setting aside of an order dated 18.2.2019 under Section 130(2) of the Act by the First Appellate Authority, and the jurisdictional fact for initiating adjudication proceedings under Section 74.

Imposition of Tax, Interest, and Penalty:
The petition was filed against the order passed by the Joint Commissioner Circle imposing tax, interest, and penalty totaling to Rs. 28,33,67,301.80 under Section 74(9) of the U.P. GST Act. The petitioner contended that there was no surviving jurisdiction to pass that order as the earlier order dated 18.2.2019 under Section 130(2) of the Act, which led to the adjudication proceedings, was set aside by the First Appellate Authority.

Enforcement of Rule of Alternative Remedy:
Although the rule of alternative remedy may have been enforced against the petitioners, the court entertained the petition on the basis that there was no surviving jurisdiction to pass the order dated 17.8.2021, as the earlier order under Section 130(2) had been set aside by the First Appellate Authority.

Setting Aside of Earlier Order by First Appellate Authority:
The order dated 18.2.2019 passed under Section 130(2) was set aside in its entirety by the First Appellate Authority. It was noted that neither that order was challenged nor were any new facts discovered that may have led to fresh proceedings being drawn up for adjudication.

Jurisdictional Fact for Initiating Adjudication Proceedings:
It was observed that the essential facts found non-existent in the earlier proceedings had a material bearing on the adjudication proceedings under Section 74. Since the substratum of the charge in the proceedings under Section 74 stood wiped out by the First Appellate order, there was no jurisdictional fact to initiate the adjudication proceedings.

Conclusion:
The writ petition was allowed, and the impugned order passed by respondent no.2 along with the impugned notices were set aside. The court did not pass any order as to costs, despite the possibility of imposing costs as pursued by the learned Standing Counsel.

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