2024 (2) TMI 858 - HC - GST

Tax Assessment Challenged: Procedural Fairness Prevails as Arbitrary Proceedings Nullified and Opportunity for Response Granted

HC allowed the writ petition challenging tax assessment orders. The court found the proceedings arbitrary due to non-provision of SIB report to the ... Validity of assessment order - entire exercise was conducted on the basis of the SIB report and it was stated that neither by the adjudicating authority nor by the appellate authority the petitioner was provided copy of the SIB report - whether the petitioner was provided copy of the SIB report which forms basis of the entire assessment made against the petitioner? - Violation of principles of natural justice - HELD THAT:- Undoubtedly, from the aforesaid written instructions it is clear that the SIB report was never given to the petitioner and there is no dispute with regard to the same. Undisputedly, the entire assessment having been made on the basis of the SIB report it was incumbent upon the the adjudicating authority to have provided a copy of the same to the petitioner while issuing notice to him and not giving a copy of the SIB report has severely prejudiced the case of the petitioner and this Court has no hesitation in holding that the proceedings were in gross violation of the principles of natural justice. Wherever any person is asked to give his response and the charges are bases on certain matterial and documents then it is mandated that the delinquent should be provided all the material on the basis of which the said charges are framed and by not giving such materials will severely prejudice the case of a person who is asked to respond to the said charges. In the present case not providing copy of the SIB report has severely prejudiced the case of the petitioner and accordingly on this ground alone the proceedings are arbitrary being in violation of the principles of natural justice. The matter is remitted back to the adjudicating authority to provide the petitioner a copy of the SIB report and any other material which forms basis of the demands issued against the petitioner - petition allowed by way of remand. Issues Involved:Challenge to assessment order dated 19.5.2022 and appeal order dated 25.10.2023 under the Uttar Pradesh Goods and Service Tax Act, 2017 based on non-provision of SIB report to the petitioner.Comprehensive details of the judgment for each issue involved:1. The petitioner, a private limited firm, challenged the assessment order creating demands against them for the financial year 2018-19. The petitioner contended that they had filed returns regularly and the assessment was based on incorrect facts, particularly on the allegation that they did not file returns for that year. The assessment was done based on seized documents indicating transactions from two bank accounts totaling Rs. 535.33 lakhs, while the petitioner reported business only for Rs. 207.988 lakhs. The imposition of tax and penalty was based on the alleged intention to evade tax due to the undisclosed amount. The petitioner's version was not considered by the appellate authority due to their non-appearance. 2. The petitioner challenged the orders on the ground that they were not provided with a copy of the SIB report, which formed the basis of the assessment against them. The lack of access to the SIB report severely prejudiced the petitioner's ability to defend against the charges. The Court found that not providing the SIB report violated principles of natural justice, as the delinquent should be given all material forming the basis of charges. The failure to provide the SIB report rendered the proceedings arbitrary and in violation of natural justice principles.3. The Court held that the orders passed by the authorities were arbitrary and illegal due to the non-provision of the SIB report to the petitioner. The matter was remitted back to the adjudicating authority with directions to provide the petitioner with a copy of the SIB report and any other material forming the basis of the demands. The petitioner was granted the opportunity to respond to the show cause notice within two weeks of receiving the documents, and the adjudicating authority was instructed to finalize the matter within six weeks thereafter, ensuring a full opportunity of hearing for the petitioner. The writ petition was allowed in favor of the petitioner.