2024 (2) TMI 805 - HC - GST

Tax Assessment Order Invalidated Due to Procedural Flaws in Audit Notice, Directing Fresh Evaluation with Proper Hearing Opportunity

TVS SCS GLOBAL FREIGHT SOLUTIONS LIMITED, Represented by its Director Mr. Siddharth Jairaj son of Mr. Ittiyanath Kairaj Versus Assistant Commissioner (ST), Chennai

HC quashed assessment order for tax period 2017-18 involving freight forwarding services. Court found procedural defects in audit notice and show cause ... Validity of assessment order - replies submitted by the petitioner and the documents provided by the petitioner were not taken into consideration - principles of natural justice - HELD THAT:- The petitioner has placed on record the reply issued to the show cause notice in Form DRC-01 and the reply issued to the notice dated 26.10.2023. On perusal thereof, it is evident that the petitioner has dealt with each alleged defect. The e-mail of 31.12.2023 is also on record. By such e-mail, the petitioner has annexed relevant documents corresponding to each alleged defect. For instance, as regards Defect No.13, the trial balance pertaining to Tamil Nadu appears to have been annexed. On examining the findings in the impugned order pertaining thereto, it appears that the assessing officer recorded conclusions based on the pan-India turn over on the ground that the petitioner did not submit a Tamil Nadu auditor's certified financial statement. The assessment order was issued without duly taking into consideration the replies and documents submitted by the petitioner, and the sequence of dates and events leads to the inference that the entire process appears to have been concluded in haste. For such reasons, the impugned assessment order calls for interference. The assessment order dated 31.12.2023 is quashed and the matter is remanded for re-consideration - Petition disposed off. Issues: Assessment order for tax period 2017-18 challenged by petitioner engaged in freight forwarding services; Alleged defects in audit notice and subsequent show cause notice; Consideration of replies and documents by assessing officer questioned.Judgment Summary:Issue 1: Compliance with Principles of Natural JusticeThe petitioner challenged an assessment order issued on 31.12.2023 for the tax period 2017-18. The petitioner, a company providing freight forwarding services, received an audit notice followed by a show cause notice regarding alleged defects. The petitioner responded to these notices, providing explanations and documents. However, the assessing officer issued the impugned assessment order without duly considering the petitioner's replies and documents, leading to the conclusion that the process was rushed. The petitioner contended that the assessment order should be set aside.Issue 2: Consideration of Replies and DocumentsThe petitioner's counsel highlighted that the replies dated 06.06.2023, 29.09.2023, and 26.10.2023 addressed each alleged defect, with additional information provided via email on 31.12.2023. The assessing officer's findings on Defect No.12 and Defect No.13, particularly regarding pre-GST period turnover and certification, were deemed inadequate and cryptic. The assessment order failed to take into account the petitioner's submissions, indicating a lack of proper consideration.Judgment:The High Court quashed the assessment order dated 31.12.2023 and remanded the matter for reconsideration. The assessing officer was directed to afford the petitioner a reasonable opportunity, including a personal hearing, consider all replies and documents submitted, and issue a fresh assessment order within a maximum of two months. The writ petition was disposed of with no costs, and related motions were closed accordingly.