2023 (11) TMI 1019 - HC - GST

Unregistered business tax assessment upheld under Section 63 after proper notice and hearing procedures followed

Kumaran K.V., Proprietor Kumar Motor Driving School Versus State Tax Officer (Intelligence), Joint Commissioner (Int), State Goods And Service Tax Department, Kerala,

The Kerala HC dismissed a writ petition challenging an assessment order imposing tax liability with interest on an unregistered business. The court held ... Principles of Natural Justice - Jurisdiction - power of Assessing Authority to issue SCN - tax liability with interest against the petitioner for conducting the business without registration - HELD THAT:- The order impugned cannot be said to be without jurisdiction and has not been passed in violation of the principles of natural justice. The Assessing Authority has the power to issue a show cause notice under Section 63 and pass the Assessment Order in accordance with the law in respect of the receipts received by the petitioner for providing services. Therefore, the said order cannot be said to be without jurisdiction. The petitioner was afforded the opportunity to file a reply and was also personally heard in the matter, and thereafter, the impugned order was passed. While exercising the writ jurisdiction, the Constitutional Court would confine only to the decision making process of the authority. If the decision has been taken as per the prescribed procedure, in observance of the principle of natural justice, even if the decision is rendered by the authority on an erroneous question of law and a statutory appeal is available against such an order, the Writ Court would not interfere with the decision and the remedy would be for filing the statutory appeal. Thus, the present writ petition cannot be entertained against the impugned assessment order, which has been passed in accordance with the law - The writ petition is dismissed. Issues:The judgment involves the assessment order passed under Section 63 of the CGST/SGST Act 2017, concerning the liability of service fee collected by the petitioner, along with penalty and interest.Issue 1 - Assessment Order and Tax Liability:The petitioner, a service provider in motor training, was assessed for the service fee collected from customers for the years 2017-18 to 2021-22. The assessing taxable turnover, tax at the rate of 18%, penalty under Section 122(1)(xi), and interest were imposed, totaling Rs. 1,90,66,593.Issue 2 - Search and Show Cause Notice:A search was conducted at the premises of the petitioner's driving school, leading to the seizure of records showing fees collected exceeding the threshold limit. The State Tax Officer issued a show cause notice for conducting business without registration, directing the petitioner to appear before the authority.Issue 3 - Reply and Assessment by Authority:The petitioner filed a reply to the show cause notice, contesting the entity in question and the proper maintenance of accounts. The Assessing Authority found 'Kumar Motors' and 'Kumar Motor Driving School' to be the same entity, with improper bookkeeping practices and lack of quantification of income.Issue 4 - Jurisdiction and Natural Justice:The judgment upheld the jurisdiction of the Assessing Authority to issue the show cause notice and pass the assessment order, stating that the decision-making process was not in violation of natural justice principles. The petitioner was given the opportunity to respond and was heard before the order was passed.Conclusion:The writ petition challenging the assessment order was dismissed, emphasizing the availability of an appeal as the proper remedy. The petitioner was granted the liberty to appeal before the Appellate Authority within fifteen days, with the Court refraining from expressing any opinion on the merit of the case.