2024 (3) TMI 895 - HC - GST

Assessment order quashed for erroneous tax calculation on all-India turnover instead of declared turnover with conditional remand

M/s. Ralco Synergy Pvt. Ltd. (Represented by its Director Shri. Raju Sureka) Versus The Joint Commissioner of State Tax Intelligence - I, Chennai, The State Tax Officer, Chennai

The HC quashed the assessment order dated 23.12.2023 due to non-application of mind by the assessing officer, who erroneously calculated tax based on ... Breach of principles of natural justice and lack of jurisdiction - Excessive tax demand as a condition for remand - time lag of about two months between the show cause notice and the assessment order - Petitioner not participate in proceedings and contest the tax demand - HELD THAT:- On examining the impugned assessment order, it is noticeable that the assessing officer has taken into consideration the closing balance of creditors on all India basis. Similarly, based on the profit and loss account of the petitioner, the total revenue and expenditure of the corporate entity were made the basis for imposing GST. These conclusions clearly reflect non-application of mind. At the same time, it should be recognized that an intimation and show cause notice preceded the assessment order. There is also a time lag of about two months between the show cause notice and the assessment order. Therefore, it follows that the petitioner was negligent in not responding to the show cause notice and participating in proceedings. Petitioner submits that the petitioner is ready and willing to remit a reasonable portion of the impugned tax demand as a condition for remand. However, he points out that 10% of the total disputed tax demand would be excessive in as much as this includes the all India turn over. Therefore, the impugned assessment order is quashed subject to the condition that the petitioner remits 5% of the disputed tax demand as a condition for remand - Petitioner is permitted to file a reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order along with 5% of the disputed tax demand. Thus, petition is disposed of. Issues involved: Challenge to assessment order based on breach of natural justice and lack of jurisdiction.The assessment order dated 23.12.2023 was challenged primarily on the grounds of breach of principles of natural justice and lack of jurisdiction. An intimation in Form DRC-01A was issued to the petitioner in January 2023 following an inspection by the respondent in November 2022. The petitioner requested additional time to respond, but subsequently received a show cause notice and the impugned assessment order.The petitioner's counsel argued that the tax imposed under certain serial numbers was based on transactions carried out on an all India basis, highlighting discrepancies in the assessment. Specifically, it was noted that the assessing officer erroneously calculated the tax based on the difference between all India turnover and declared turnover. The counsel contended that the assessment order lacked jurisdiction and also suffered from non-application of mind.The Additional Government Pleader representing the respondent pointed out that the State Tax Officer was not included as a party in the writ petition. He further argued that the assessment order was a result of the petitioner's failure to participate in the proceedings and contest the tax demand despite prior intimation and show cause notice.The Court, upon noting the absence of the State Tax Officer as a party, impleaded them as the second respondent. The assessment order was found to reflect non-application of mind, particularly in considering all India basis figures for certain calculations. However, it was acknowledged that the petitioner neglected to respond to the show cause notice and engage in the proceedings, leading to the decision to quash the assessment order with a condition for the petitioner to remit 5% of the disputed tax demand for remand.The petitioner expressed readiness to comply with the condition for remand by remitting a reasonable portion of the disputed tax demand. The Court directed the petitioner to file a reply to the show cause notice within two weeks of receiving the order copy along with the 5% remittance. Upon satisfaction of this condition, the assessing officer was instructed to provide a reasonable opportunity, including a personal hearing, and issue a fresh assessment order within two months.The writ petition was disposed of with the condition that the petitioner remits 5% of the disputed tax demand for remand. The petitioner was granted two weeks to file a reply to the show cause notice. The assessing officer was directed to issue a fresh assessment order within two months after receiving the reply and the remittance. No costs were awarded, and related motions were closed.