2025 (2) TMI 1266 - HC - GST

Assessment under Section 75(4) TNGST set aside for 2017-18; remitted for fresh hearing with 14-day notice

Tvl. Sri Vinayaga Tiles & Granites Versus The Deputy State Tax Officer (ST) Avinashi Assessment Circle, Avinashi

HC set aside the assessment order issued in Form GST DRC-07 and detailed order dated 29.12.2023 for assessment year 2017-18, finding violation of natural ... Challenge to order passed by the respondent in Form GST DRC-07 along with a detailed order - respondent, without issuing any intimation in Form GST ASMT -10, directly issued Notice in Form GST DRC-01A - petitioner had no knowledge about the impugned proceedings, until, the petitioner's Accountant has brought to the notice about the impugned proceedings - opportunity of hearing also not provided - violation of principles of natural justice - HELD THAT:- The question of provision of an opportunity of personal hearing to the assessee would arise only after taking note of the reply filed by the petitioner/assessee, and in the present case, the petitioner was called upon to appear for the personal hearing even before the reply was filed by the petitioner. As rightly contended by the learned counsel for the petitioner no useful purpose would be served by hearing the petitioner without going through the reply filed by the petitioner. Therefore, it is clear that the impugned order suffers from violation of principles of natural justice and against the provisions of Section 75 (4) of the TNGST Act, inasmuch as, an opportunity of hearing ought to have been granted, where any adverse decision is contemplated against taxpayer (petitioner in this case). In fact, this Court is of the view that had the reply filed by the petitioner was taken into consideration by the respondent and personal hearing opportunity was granted, obviously, the petitioner would have explained the respondent/Authority, whereby, the respondent would have dropped the proceedings against the petitioner or otherwise, would have provided the reasons for rejection. The impugned order issue in Form GST DRC-07 dated 29.12.2023 along with detailed order in GSTIN : 33AYAPM9399N1ZM/2017-18 dated 29.12.2023 for the assessment period 2017-18 are set aside - the matter is remitted back to the respondent for fresh consideration, who shall fix a date for personal hearing by issuing a clear 14 days notice and hear the petitioner in person and peruse the records and redo the assessment in accordance with law. Petition allowed by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether uploading notices on the GST portal under the 'Additional Notices' tab, without any other mode of communication, suffices to constitute valid service of notice where the assessee did not actually see the notices. 2. Whether an opportunity of personal hearing must be granted after the assessing authority has taken note of and considered the reply filed by the taxpayer, and whether fixing a personal hearing before considering the taxpayer's reply offends the principles of natural justice. 3. Whether an adverse assessment order that records non-appearance at a personal hearing despite the authority not having considered the taxpayer's reply (filed before the order but after the hearing date) is vitiated for want of compliance with the statutory hearing requirement (Section 75(4) of the TNGST Act) and principles of natural justice. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of notice effected solely by portal upload under 'Additional Notices' Legal framework: Administrative notice requirements under the GST regime contemplate issuance of notices (e.g., FORM GST DRC-01A, DRC-01) to the assessee; the manner and effectiveness of communication affect the assessee's opportunity to respond and be heard. Precedent Treatment: No prior judicial authorities were cited or relied upon by the Court in the present judgment. Interpretation and reasoning: The Court observed that all notices were merely uploaded to the GST portal under the 'Additional Notices' tab and went unnoticed by the petitioner. Actual knowledge of the proceedings occurred only when the petitioner's accountant drew attention to them. The Court treated the lack of actual notice as material because the taxpayer had no occasion to view the portal and therefore was effectively deprived of the practical ability to respond or appear. Ratio vs. Obiter: This observation is treated as ratio inasmuch as it underpins the Court's conclusion that the communication method failed to provide a real opportunity to the taxpayer and contributed to the decision being set aside. Conclusion: Uploading notices on the portal in a manner that does not bring them to the taxpayer's attention in practice cannot be taken to have furnished effective notice where the taxpayer does not actually see them; such a mode of communication, without ensuring the assessee's awareness, is inadequate in the circumstances of the case. Issue 2 - Timing of personal hearing in relation to the taxpayer's reply; requirement to consider reply before or as part of granting hearing Legal framework: The right to be heard and statutory provisions (notably Section 75(4) of the TNGST Act, as invoked by the Court) require that an opportunity of hearing be granted before an adverse decision is taken against a taxpayer. Precedent Treatment: No authorities were cited; the Court applied statutory principle and general principles of natural justice. Interpretation and reasoning: The Court held that the occasion for a personal hearing arises after the authority has taken note of the reply filed by the taxpayer so that a meaningful hearing can occur. Fixing a personal hearing before consideration of the reply renders the hearing mechanistic and of no utility, because the authority cannot sensibly engage with the taxpayer's contentions without first perusing the written reply and supporting documents. The Court found that in the present case the hearing was fixed prior to consideration of the reply and that the authority proceeded to treat the taxpayer as having failed to appear, despite the reply having been filed and not considered. Ratio vs. Obiter: The holding that a personal hearing must be fixed and conducted after the authority has considered the taxpayer's reply is part of the ratio, as it directly supports the conclusion that procedural infirmity vitiated the order. Conclusion: A personal hearing called without consideration of the taxpayer's written reply violates the principles of natural justice and the statutory requirement to afford hearing before adverse action; the authority ought to consider the reply first and then fix a hearing to enable an effective, informed oral hearing. Issue 3 - Validity of an assessment order recording non-appearance when the reply was filed but not considered; effect of such procedural lapse Legal framework: Statutory duty to provide an opportunity of hearing before passing an adverse order (Section 75(4) of the TNGST Act) and the constitutional/common law doctrine of audi alteram partem. Precedent Treatment: No precedent cited; the decision rests on statutory interpretation and principles of natural justice applied to the facts. Interpretation and reasoning: The Court found that the authority passed the impugned order on 29.12.2023 stating non-appearance at a hearing fixed on 01.12.2023, although the taxpayer's reply had been filed (on 27.12.2023) and was not considered. The Court reasoned that an adverse decision taken without considering the taxpayer's submissions and without granting a meaningful hearing constitutes arbitrariness and violation of natural justice. The Court accepted the petitioner's contention that had the reply been considered and a hearing granted, the proceedings may have been dropped or reasons given for rejection, underscoring the prejudice caused by the lapse. Ratio vs. Obiter: The conclusion that the impugned assessment is vitiated by failure to consider the reply and by denial of a meaningful hearing is ratio and grounds the remedial outcome. Conclusion: The assessment order is invalid for want of compliance with the statutory hearing requirement and principles of natural justice; the appropriate remedy is to set aside the order and remit the matter for fresh consideration with a mandatorily effective opportunity of hearing. Remedial Direction (connected to Issues 1-3) Interpretation and reasoning: In light of the procedural defects identified-ineffective notice by portal upload, hearing fixed without considering the reply, and an adverse order recording non-appearance despite the reply-the Court exercised its supervisory jurisdiction to vacate the impugned order and remit the matter for fresh consideration. Ratio vs. Obiter: The remedial direction is ratio insofar as it follows directly from the Court's findings on notice, hearing, and natural justice. Conclusion: The impugned order is set aside; the matter is remitted for redetermination. The authority is directed to issue a clear 14-days notice fixing a date for personal hearing, peruse and consider the taxpayer's records and reply, hear the taxpayer in person, and redo the assessment in accordance with law. No costs were imposed.