2023 (11) TMI 95 - HC - GST

Assessment order set aside for denying adequate time to respond violating natural justice principles

The Madras HC allowed the writ petition, setting aside an assessment order dated 29.06.2023 for violation of natural justice principles. The court found ... Principles of natural justice - Notice and opportunity to be heard - Service of notice through online portal - Speaking order - Obligation to record reasons - Consideration of reply/evidence - Remand for fresh consideration - Mandamus to afford hearing and pass speaking orderPrinciples of natural justice - Notice and opportunity to be heard - Service of notice through online portal - The opportunities of hearing afforded to the petitioner were not fair and amounted to violation of principles of natural justice. - HELD THAT: - The Court found that although three hearing opportunities were nominally granted, the notices did not afford sufficient time to enable the petitioner to file an effective reply. The last hearing notice was uploaded on the e-Portal on 21.06.2023 at 9.52 p.m. and fixed a personal hearing within about 36 hours, with documents sought for the first time. The notice was not served by any physical mode and fell within two working days when the petitioner did not have access to the portal; on noticing the upload the petitioner attended on the next working day and sought time to produce documents. A window of less than two days to assemble and produce the specified documents cannot be regarded as a fair opportunity under the Act, and therefore the procedure adopted did not satisfy the requirements of natural justice. [Paras 7, 8]The notices and hearing opportunities were inadequate and amounted to a breach of natural justice.Speaking order - Obligation to record reasons - Consideration of reply/evidence - The assessment order is non-speaking and the Assessing Officer failed to set out reasons for rejecting the petitioner's explanations and documentary submissions. - HELD THAT: - On review of the assessment order, the Court observed that the Assessing Officer merely recorded that the petitioner's tabulated reply without supporting documents could not be accepted and that it could not be synchronized with Departmental alerts, but did not explain in what respect the explanations were unacceptable or why the submitted material (or repeated replies) were insufficient. The impugned order is largely a verbatim reproduction of the petitioner's tabulated reply and lacks a clear articulation of the reasons for confirmation of the proposals in the show cause notice, thereby failing the requirement of a speaking order and the duty to consider replies and evidence put forth by the assessee. [Paras 4, 9, 10]The assessment order is not a speaking order and does not properly record consideration of the petitioner's reply and documents.Remand for fresh consideration - Mandamus to afford hearing and pass speaking order - The assessment order dated 29.06.2023 is set aside and the matter is remanded for fresh adjudication with specific directions. - HELD THAT: - Balancing the interests of the assessee and the Revenue and in view of the procedural infirmities identified, the Court directed that the impugned assessment be set aside and remitted to the second respondent for re-adjudication. The Court ordered that one more personal hearing be afforded to the petitioner (to be fixed on 16.11.2023), at which the petitioner shall file its reply together with all documents in support of its claim, including those listed in the notice dated 21.06.2023; thereafter the second respondent is to peruse the documents, conduct a full-fledged hearing and pass a fresh speaking assessment order addressing all issues raised by the petitioner by 12.12.2023. [Paras 10, 11]The assessment order is set aside and the matter is remanded for fresh consideration with directions to afford a further hearing and to pass a speaking order within the specified time.Final Conclusion: Writ petition allowed; assessment order dated 29.06.2023 set aside and matter remanded to the Assessing Officer for fresh adjudication with a further personal hearing and directions to consider the petitioner's documents and to pass a speaking order within the time stipulated by the Court. Issues Involved:1. Violation of principles of natural justice.2. Insufficient time provided for responding to notices.3. Lack of a speaking order by the respondent.Summary:Violation of Principles of Natural Justice:The petitioner challenged the assessment order dated 29.06.2023 and the show cause notice dated 21.04.2023, arguing that the impugned orders suffer from a violation of principles of natural justice. The petitioner claimed that the second respondent did not consider their replies and failed to provide adequate reasons for rejecting their explanations. The court noted that the respondent-Department had provided three opportunities for hearing but did not afford sufficient time for the petitioner to file an effective reply, thereby violating the principles of natural justice.Insufficient Time Provided for Responding to Notices:The petitioner contended that the time provided for responding to the notices was insufficient. The first notice dated 21.04.2023 gave 14 days, the second notice dated 16.06.2023 gave 4 days, and the third notice dated 21.06.2023 gave less than 36 hours for the petitioner to respond. The court observed that the third notice was uploaded on the e-Portal at 9.52 p.m. on 21.06.2023, calling for a hearing on 23.06.2023 at 11.00 a.m., which did not provide a fair opportunity for the petitioner to produce the required documents.Lack of a Speaking Order by the Respondent:The court found that the impugned order dated 29.06.2023 did not provide clear reasons for rejecting the petitioner's explanations. The order merely stated that the petitioner's reply could not be accepted without specifying why the explanations were unsatisfactory. The court emphasized the need for a speaking order that addresses all issues raised by the petitioner.Conclusion:The court concluded that the impugned orders were untenable due to the violation of principles of natural justice, insufficient time for response, and the lack of a speaking order. The assessment order dated 29.06.2023 was set aside, and the matter was remanded to the second respondent for fresh consideration. The court directed the second respondent to provide a fair opportunity for a personal hearing on 16.11.2023 and to pass a fresh, speaking assessment order by 12.12.2023. The writ petition was allowed, and the connected writ miscellaneous petition was closed. The matter was listed for reporting compliance on 14.12.2023.