Assessment order set aside for violating natural justice; pre-amendment Rule 142(1A) requires prior intimation and fresh notice within two weeks

The HC set aside the assessment order dated 31.03.2022, finding issuance of a show-cause notice without prior intimation under pre-amendment Rule 142(1A) violated principles of natural justice. Because the assessment period spanned pre- and post-amendment phases, the court applied the pre-amendment mandatory procedure in the taxpayer's favour and directed the authority to issue a fresh tax intimation under Rule 142(1A) (pre-amendment) within two weeks of receipt of the order, quashing the impugned assessment.

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Issues: Whether the assessment order dated 31.03.2022 is invalid for failure to issue a prior tax intimation under Rule 142(1A) of the CGST Rules (as it stood pre-amendment) before issuing a show cause notice under Section 74(1), where the assessment period spans pre-amendment and post-amendment periods.

Analysis: Rule 142(1A) prior to amendment employed the word "shall" requiring the proper officer to communicate details of tax, interest and penalty in Part A of FORM GST DRC-01A before serving a notice under Section 73(1) or Section 74(1). The rule was amended on 15.10.2020 substituting "shall" with "may", making issuance discretionary for periods wholly after amendment. The impugned show cause notice covered the period 01.07.2017 to 31.03.2021, thus including significant pre-amendment period for which issuance of intimation was mandatory. The earlier intimation issued by the initial officer for part of the earlier period was not acted upon after transfer of the file; the later assessing officer issued a show cause notice without issuing the pre-amendment intimation for the full period. In presence of ambiguity on applicability across the combined period, the rule of construing ambiguity in favour of the taxpayer applies, and procedural compliance with the pre-amendment mandate was required before proceeding to assessment for that period.

Conclusion: The assessment order dated 31.03.2022 is set aside for failure to issue the mandatory pre-amendment intimation under Rule 142(1A) for the pre-amendment portion of the period; direction issued to the assessing authority to issue fresh tax intimation under the pre-amendment Rule 142(1A) and proceed thereafter as per law.

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