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 petitioner, violating natural justice principles. The matter was remitted back to the adjudicating authority with directions to provide all relevant documents and grant the petitioner an opportunity to respond within two weeks, with final resolution mandated within six weeks.

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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.

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