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of <h1>Assessment order set aside for violating natural justice; pre-amendment Rule 142(1A) requires prior intimation and fresh notice within two weeks</h1> 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) ... Validity of Show Cause Notice - SCN issued straight away, without issuing a prior intimation under Rule 142(1A) of CGST Rules, 2017 - Violation of principles of natural justice - Applicability of Rule as amended - HELD THAT:- Prior to the amendment, Rule 142(1A) of CGST Rules, 2017 reads that the proper officer shall, before service of notice on the person chargeable with tax, interest and penalty under Section 73(1) or 74(1) of CGST/APGST Act, communicate him the details of tax, interest and penalty as ascertained by the said officer in FORM GST DRC-01. The employment of the word ‘shall’ in Rule 142(1A) would indicate that the officer shall necessarily follow the procedure prescribed under Rule 142(1A) of the Act, meaning thereby, an intimation of tax shall be issued in terms of Rule 142(1A) at first and if there is no response from the tax payer, then he can issue a show cause notice under Section 74(1) of CGST/APGST Act - Rule 142(1A) of CGST Rules,2017 has been amended as by virtue of notification No. 79/2020-CT dt.15.10.2020 and by virtue of the said amendment, the words ‘proper officer shall’ has been substituted with the words ‘proper officer may’ as appearing in Rule 142(1A). Thus, post amendment, the issuance of intimation under Rule 142(1A) is not mandatory, but discretionary on the part of the assessing authority. It is a trite law that whenever any ambiguity arises with regard to any provision, the benefit must go to the tax payer. In the instant case, since admittedly the tax period related to 01.07.2017 to 31.03.2021 which covers the pre and post amended period of Rule 142(1A), the 1st respondent ought to have issued tax intimation to the petitioner under Rule 142 (1A). Since it was not done, as rightly argued by the learned counsel for the petitioner, the assessment order, dated 31.03.2022, fell foul of law and is liable to be set aside. The impugned assessment order, dated 31.03.2022, passed by the 1st respondent is set aside with a direction to the 1st respondent to issue a fresh tax intimation to the petitioner in terms of Rule 142(1A) (pre amended Rule 142 (1A)) within two weeks from the date of receipt of copy of this Order - Petition allowed. 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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