2024 (3) TMI 1218 - HC - GST

Taxpayer Wins Challenge Against Arbitrary Tax Assessment Under Natural Justice Principles, Ordered Fresh Hearing with Procedural Fairness

M/s. Sri Ranganathar Constructions Private Limited, rep. by its Managing Director – M. Kandasamy Versus The Assistant Commissioner (ST) (FAC), Erode.

HC quashed assessment orders for multiple tax years after finding violation of natural justice principles. The court determined that the Assessing Officer ... Validity of Tax demand - Non consideration of reply submitted by the petitioner / assessee - works contractor and registered dealer under applicable GST enactments - Pre-deposit - HELD THAT:- The petitioner's reply has been placed on record. Although such reply is terse, the petitioner requested for two months' time to reply by citing the pending proceedings at the instance of the central GST authorities. The petitioner also pointed out that a deposit of Rs. 1,50,00,000/- was made with regard to three assessment periods. Thus, the petitioner's reply was not taken into account and the petitioner was not provided time as requested in the said reply. In these circumstances, albeit by putting the petitioner on terms, the petitioner should be provided another opportunity. Therefore, the orders impugned herein are quashed. Since the bank account of the petitioner was attached pursuant to a communication from the respondent to the Bank, the respondent is directed to appropriate 10% of the disputed tax demand in respect of each assessment year from such bank account. The petitioner is permitted to submit a reply to the show cause notice within a period of three weeks from the date of receipt of a copy of this order. These writ petitions are disposed of on the above terms. Issues involved: Challenge to assessment orders for multiple assessment years based on petitioner's reply being disregarded.Details of the Judgment:Issue 1: Compliance with principles of natural justiceThe petitioner, a works contractor and registered dealer under GST enactments, challenged assessment orders for various years citing disregard of their reply to an intimation. The petitioner's counsel argued that the Assessing Officer failed to consider the petitioner's response, thus violating principles of natural justice. The counsel also mentioned that the petitioner was willing to remit 10% of the disputed tax demand for remand.Issue 2: Adherence to natural justice principlesThe Government Advocate (Tax) contended that the principles of natural justice were followed as both an intimation and a show cause notice were issued to the petitioner. However, the petitioner's reply, which requested two months to respond due to pending proceedings with the central GST authorities and highlighted a significant deposit made, was not duly considered in the impugned orders. The court noted that the petitioner's reply was not taken into account, and the requested time extension was not granted. Consequently, the court quashed the impugned orders and directed the respondent to appropriate 10% of the disputed tax demand from the petitioner's bank account. The petitioner was given three weeks to submit a reply to the show cause notice, and upon compliance, the Assessing Officer was instructed to provide a reasonable opportunity for a personal hearing and issue fresh orders within two months.This comprehensive summary covers the issues involved in the judgment and the detailed outcome for each issue, maintaining the legal terminology and key points from the original text.