2023 (11) TMI 205 - HC - GST

Tax assessment challenged for ignoring objections to show-cause notice; non-speaking order set aside for fresh reasoned decision.

An assessment order was challenged for breach of natural justice on the ground that the assessee's objections to the show-cause notice were not ... Non-speaking order - duty to consider reply/objections filed by the assessee - principles of natural justice - remand for fresh consideration - right to two-tier adjudication by Assessing Officer and Appellate Authority - appellate authority's power to make assessment on appealNon-speaking order - duty to consider reply/objections filed by the assessee - Whether the assessment order is vitiated for being non-speaking by failing to deal with the replies/objections filed by the petitioner. - HELD THAT: - The Court found that the petitioner had filed written replies and had a personal hearing where the replies were recorded, but the Assessing Officer did not deal with those replies in the impugned order. An order which does not address the contentions raised by the assessee and gives no reasons for rejection of the replies is a non-speaking order and vitiates the proceedings. Because the replies remained undecided, the petitioner was entitled to have the Assessing Officer pass a considered, speaking order dealing with the points raised in the reply. [Paras 6, 12, 13, 14]Impugned order set aside as non-speaking; matter remitted for reconsideration by the Assessing Officer who shall pass a speaking order after considering the replies.Principles of natural justice - duty to consider reply/objections filed by the assessee - What procedural safeguards the Assessing Officer must follow while issuing show cause notices and concluding assessment proceedings. - HELD THAT: - The Court directed that the Assessing Officer, when issuing a show cause notice, should allow sufficient time for filing replies/objections (minimum of 21 days unless a specific statutory time-limit applies), afford personal hearing, furnish documents forming the basis of the notice if required, conduct a full-fledged enquiry, and pass a final assessment order which deals in detail with the queries/points raised by the assessee and gives reasons for any rejection. These steps are required to give effect to principles of natural justice and to prevent consequent litigation and revenue loss. [Paras 10, 11, 13]Assessing Officer to follow the stated safeguards and pass a detailed speaking order addressing the replies and objections in accordance with principles of natural justice.Right to two-tier adjudication by Assessing Officer and Appellate Authority - appellate authority's power to make assessment on appeal - remand for fresh consideration - Whether the Appellate Authority can substitute the Assessing Officer's opportunity to adjudicate by simply exercising assessment powers on appeal and whether remand to the Assessing Officer is appropriate. - HELD THAT: - The Court acknowledged that the Appellate Authority possesses powers under the Act to entertain an appeal and to make assessment, but observed that such powers do not substitute the Assessing Officer's role; the assessee is entitled to have matters adjudicated twice-first by the Assessing Officer and then by the Appellate Authority. The Appellate Authority is not vested with power to deprive the assessee of the Assessing Officer's considered opinion by refusing remand; therefore where the Assessing Officer has failed to consider replies, the proper course is to remit to the Assessing Officer for fresh consideration so that the assessee gets the two-tier adjudication contemplated by law. [Paras 7, 8, 9, 13]Matter remitted to the Assessing Officer for fresh consideration rather than being left to the Appellate Authority to substitute the adjudication.Final Conclusion: Writ petition allowed; impugned order dated 04.07.2023 set aside and matter remitted to the Assessing Officer to pass a detailed, speaking assessment order after considering the petitioner's replies dated 17.1.2022 and 02.2.2022 and observing principles of natural justice; no costs. Issues involved: Challenging impugned order by respondent, non-speaking order passed without considering petitioner's replies, failure to address replies/objections, entitlement to considered opinion of Assessing Officer.Judgment Summary:Issue 1: Challenging Impugned Order The petitioner firm, engaged in trading garments, challenged an order by the respondent/Department regarding tax liability under the Tamil Nadu Goods and Services Act, 2017. The respondent issued notices and held a personal hearing, but the impugned order was passed without considering the petitioner's replies, leading to the filing of a Writ Petition.Issue 2: Failure to Address Replies/Objections The learned Government Advocate admitted that the petitioner's reply was not considered in the impugned order. The Court noted that the respondent failed to address the petitioner's stand in their reply, resulting in a non-speaking order. The Appellate Authority was suggested as a remedy, but limitations were highlighted regarding remanding the matter and the importance of two well-considered opinions.Issue 3: Entitlement to Considered Opinion The Court emphasized that the Assessing Officer must follow specific procedures, including providing time for replies, personal hearings, and detailed assessment proceedings. Failure to pass a speaking order after considering objections could lead to appeals and revenue loss. The Court set aside the impugned order, directing the Assessing Officer to reconsider the matter, ensuring the petitioner's reply is taken into account for a detailed order.In conclusion, the Writ Petition was allowed, the impugned order was set aside, and the matter was remitted back to the respondent for reconsideration, emphasizing adherence to principles of natural justice.