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

The Kerala HC dismissed a writ petition challenging an assessment order imposing tax liability with interest on an unregistered business. The court held that the Assessing Authority had jurisdiction under Section 63 to issue show cause notice and pass the assessment order. The petitioner was given opportunity to reply and was personally heard, satisfying principles of natural justice. The HC ruled that constitutional courts should confine review to the decision-making process rather than substantive legal questions when statutory appeals are available, directing the petitioner to pursue statutory remedies instead.

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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.

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