2024 (2) TMI 715 - HC - GST

GST Dispute Resolved: Procedural Fairness Prevails with 7.5% Tax Deposit and Mandatory Reassessment

The HC addressed a GST dispute involving procedural fairness and portal notice accessibility. The court quashed existing assessment orders, directing the ... Principles of natural justice - service of notice via GST portal - distinction between 'View Notices' and 'View Additional Notices' - reversal of Input Tax Credit (ITC) - exercise of writ jurisdiction to quash administrative orders subject to conditions (conditional quashing) - right to personal hearing / opportunity to be heard on reconsiderationPrinciples of natural justice - service of notice via GST portal - distinction between 'View Notices' and 'View Additional Notices' - Impugned assessment orders were vitiated for breach of principles of natural justice because the notices and orders were uploaded to the 'View Additional Notices' tab on the GST portal, of which the petitioner asserted she was unaware. - HELD THAT: - The Court noted that the intimation (Form GST DRC-01A), show cause notice (Form GST DRC-01) and the assessment orders were uploaded on the GST portal under the 'View Additional Notices' tab, whereas previously such documents appeared under the 'View Notices' tab. The petitioner stated she did not become aware of the proceedings until an oral intimation in December 2023. Having regard to the change in portal dashboard and the appellant's contention that she was unaware of the uploaded documents, the Court held that the proceedings required interference to afford the assessee an opportunity to contest the matters, particularly since the subject-matter related to reversal of ITC and entailed documentary evidence and possible oral examination. The Court therefore concluded that interference was warranted to secure compliance with the principles of natural justice and to permit reconsideration after affording an effective opportunity to be heard. [Paras 5, 6]The impugned assessment orders were quashed to secure compliance with principles of natural justice and to afford the petitioner an opportunity to be heard.Exercise of writ jurisdiction to quash administrative orders subject to conditions (conditional quashing) - right to personal hearing / opportunity to be heard on reconsideration - Quashing was made conditional on the petitioner remitting 7.5% of the disputed tax demand within four weeks, and, upon such compliance, the assessing officer was directed to reconsider after providing a reasonable opportunity including a personal hearing; failure to comply would permit recovery under the impugned orders. - HELD THAT: - Balancing the need to vindicate the assessee's right to be heard with the respondent's statutory machinery, the Court exercised its writ jurisdiction to quash the orders subject to a protective condition. The petitioner was placed on terms to remit a portion of the disputed demand (7.5%) within a fixed period; on receipt of that amount the assessing officer must give the petitioner a reasonable opportunity, including a personal hearing, and pass fresh assessment orders within four weeks of such compliance. The Court also recorded that in default the respondent could proceed with recovery under the existing orders. The condition was imposed to ensure effective adjudication while protecting revenue interests. [Paras 7]Quashing was ordered subject to the condition of depositing 7.5% of the disputed tax demand within four weeks and, on compliance, directed reconsideration after affording a personal hearing; non-compliance permits recovery under the impugned orders.Final Conclusion: Writ petitions allowed in part: impugned assessment orders quashed on terms - petitioner to remit 7.5% of disputed demand within four weeks, upon which fresh assessment shall be conducted after giving a reasonable opportunity including a personal hearing; failure to comply will permit recovery under the original orders. No order as to costs. Issues Involved: The issues involved in this case pertain to breach of principles of natural justice due to the petitioner's alleged unawareness of notices and assessment orders, the necessity for the petitioner to contest the reversal of Input Tax Credit (ITC), and the adequacy of appellate remedy in such circumstances.Breach of Principles of Natural Justice: The petitioner, a proprietrix of a business engaged in the supply of steel and construction materials, claimed unawareness of the notices and assessment orders until an oral intimation in December 2023. The petitioner argued that documents were posted in the 'View Additional Notices' tab on the GST portal, while previously they were on the 'View Notices' tab, leading to the petitioner's lack of knowledge about the proceedings. The petitioner's counsel emphasized the need to present relevant documents and cross-examine individuals relied upon by the assessing officer.Response of the Respondent: The Additional Government Pleader representing the respondent highlighted that the intimation, show cause notice, and impugned order were issued on specific dates in 2023. The respondent contended that as a registered person under the GST regime, the petitioner should have accessed the portal within the nine-month period, and should now avail of the statutory remedy. The documents on record indicated that notices and assessment orders were uploaded on the GST portal, with a subsequent redesign of the dashboard in January 2024 to clarify the types of notices and orders.Judgment and Directions: Considering the circumstances to provide the petitioner with an opportunity to contest the proceedings, the court decided to quash the impugned orders subject to a condition. The petitioner was directed to remit sums equal to 7.5% of the disputed tax demand under each assessment order within four weeks. Upon compliance, the assessing officer was instructed to reconsider the matter, ensuring a reasonable opportunity for the petitioner, including a personal hearing. Failure to meet the condition would allow the petitioner to initiate recovery proceedings as per the assessment orders. If the condition was fulfilled, fresh assessment orders were to be issued within four weeks. The writ petitions were disposed of with no costs, and connected miscellaneous petitions were closed.