2023 (12) TMI 1283 - HC - GST

GST Assessment Order Invalidated Due to Lack of Proper Notice, Petitioner Granted Opportunity to Respond and Seek Fresh Assessment

HC found a violation of natural justice in the GST assessment order. The order was issued without proper notice after the petitioner's registration was ... Violation of principles of natural justice - Service of statutory notice via GST portal versus entitlement to physical service - Cancellation of GST registration and its effect on service of notices - Remand for fresh assessment with opportunity to file reply - Prohibition on raising limitation defence on remandViolation of principles of natural justice - Service of statutory notice via GST portal versus entitlement to physical service - Cancellation of GST registration and its effect on service of notices - Impugned assessment order set aside for breach of natural justice owing to lack of time to reply and absence of physical service when registration was cancelled prior to upload. - HELD THAT: - The Court found that the notice in GST ASMT-10 was uploaded on 29.9.2023 and a show cause notice under Section 73 was uploaded the next day, without affording the petitioner any time to file a reply. It was also recorded that the petitioner's GST registration had been cancelled before the notices were uploaded on the portal. In these circumstances the procedure adopted resulted in denial of an opportunity of hearing and thereby violated the principles of natural justice. Consequently the assessment order (Ext.P5) premised on that process is unsustainable and has been set aside. [Paras 3, 4]Assessment order Ext.P5 is set aside for breach of natural justice.Remand for fresh assessment with opportunity to file reply - Prohibition on raising limitation defence on remand - Matter remanded for fresh assessment with directions permitting the petitioner to file reply and be heard; petitioner barred from taking limitation as a ground in finalisation. - HELD THAT: - The Court remitted the matter to the assessing authority for fresh consideration and directed that the petitioner be allowed to file a reply to the show cause notice within three days from the date of the order. If a reply is filed, the petitioner must be afforded an opportunity of hearing before finalising the assessment. The Court also expressly recorded that the petitioner shall not take any ground regarding limitation in finalising the assessment for the assessment year 2017-18. [Paras 5]Matter remanded for fresh assessment; petitioner permitted to file reply within three days and given opportunity of hearing; petitioner estopped from raising limitation defence in the final assessment.Final Conclusion: The writ petition is allowed in part: the assessment order Ext.P5 is quashed for breach of natural justice and the matter is remanded to the assessing authority for fresh assessment after giving the petitioner the stated opportunity to reply and be heard; the petitioner is precluded from relying on limitation in the remade assessment. The petition stands finally disposed of. Issues involved: Violation of principles of natural justice in passing assessment order, Challenge to the validity of section 16(4) of the CGST/SGST Act, 2017The petitioner filed a writ petition seeking the quashing of Exhibit P5 order and P6 summary of order in Form GST DRC-07, alleging violation of natural justice and limitation. The petitioner also requested the invocation of powers under section 172 of the CGST/SGST Act, 2017 to address difficulties faced by taxable persons in availing input tax credit from belatedly filed returns and challenged the constitutionality of section 16(4) of the CGST/SGST Act, 2017.The Court noted that the petitioner was issued a notice in Form GST ASMT-10 and a show cause notice under Section 73 of the CGST Act, 2017, without receiving physical copies, as they were uploaded on the GST portal. The petitioner's registration had been cancelled before the issuance of these notices, leading to the petitioner not filing a reply. The Court observed a lack of time granted for the petitioner to respond to the notices, indicating a violation of natural justice in passing the assessment order, Ext.P5.The Court found merit in the petitioner's argument, highlighting that the notices were issued one after the other without affording the petitioner an opportunity to respond. Additionally, the petitioner's GST registration had been cancelled before the notices were uploaded on the portal, further supporting the violation of natural justice in the assessment process.Consequently, the Court held that the impugned assessment order, Ext.P5, was unsustainable due to the violation of natural justice. The order was set aside, and the matter was remanded to the assessing authority for a fresh order. The petitioner was granted three days to file a reply to the show cause notice dated 30.9.2023, and the assessing authority was directed to provide an opportunity for the petitioner before finalizing the fresh assessment. The petitioner was barred from raising any grounds regarding the limitation in finalizing the assessment for the relevant year.In conclusion, the writ petition was disposed of with the above observations and directions, while any pending interlocutory application was dismissed.