Tax Authorities Overturned for Arbitrary Valuation Methods, Ordered to Conduct Fair GST Assessment with Proper Personal Hearing

HC quashed GST assessment orders challenging tax demand based on arbitrary internet-sourced valuations. Court directed 10% tax adjustment from electronic credit ledger, mandated fresh assessment with proper personal hearing, and invalidated recovery notice. Petitioner granted fifteen days to respond to show cause notice, with proceedings to be conducted fairly and transparently.

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Issues Involved:
Challenging assessment orders and recovery notice under GST statutes.

Assessment Orders Challenge:
The petitioner, a registered person in the construction business, challenged assessment orders for four years and a recovery notice in the fifth petition. The petitioner claimed Input Tax Credit (ITC) for goods purchased during the relevant periods, despite not engaging in construction activities. The primary challenge was the lack of proper service of notices as per Section 169 of GST statutes. The assessing officer relied on internet sources to attribute values to construction materials, which the petitioner argued was arbitrary and untenable.

Legal Grounds and Interference:
The impugned assessment orders referred to notices issued in May 2022, including a show cause notice with a personal hearing offer. However, it was noted that the petitioner was not heard during the assessment process. The assessing officer's reliance on internet information for valuing materials deprived the petitioner of the opportunity to present relevant evidence. Consequently, the court found that the assessment orders required interference, with the petitioner to be given a chance to respond and provide relevant materials.

Court Decision and Directions:
The court quashed the assessment orders with the condition that 10% of the disputed tax demand under each order be adjusted from the petitioner's electronic credit ledger. The petitioner was given fifteen days to respond to the show cause notice. Upon confirmation of the adjustment and after providing a reasonable opportunity for a personal hearing, fresh assessment orders were to be issued for each year. As a result of quashing the assessment order, the recovery notice was deemed invalid. The cases were disposed of with no costs incurred.

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