2024 (4) TMI 658 - HC - GST

Tax Assessment Quashed: Procedural Fairness Demands Personal Hearing and Comprehensive Explanation Review

HC found a breach of natural justice in the tax assessment order. The assessment was set aside due to lack of personal hearing and failure to consider the ... Validity Of assessment order - No opportunity of personal hearing - breach of principles of natural justice - difference in outward turnover between the books of account and various returns - HELD THAT:- From the impugned order, it appears that this request was not entertained and the order was issued on 31.12.2023. Although the order refers to a personal hearing notice issued on 31.12.2023, there is nothing on record to indicate that such personal hearing notice was issued. On examining the impugned order with regard to turnover discrepancy as between the different returns, it is noticeable that the petitioner explained the difference in its reply dated 28.07.2023 by pointing out that the lower amount was inadvertently reported in the GSTR 1 statement, which was subsequently rectified by filing the annual return. This aspect has not been noticed in the impugned order. Thus, the impugned order dated 28.12.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit additional documents in support of its reply within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of additional documents from the petitioner. The writ petition is disposed of on the above terms without any order as to costs. Issues involved: Assessment order challenged on grounds of breach of natural justice.Summary:The assessment order dated 31.12.2023 was challenged primarily on the basis of breach of principles of natural justice. The petitioner had received a show cause notice dated 29.09.2023 following an audit of their books of account. The petitioner replied to the notice on 14.10.2023 and 27.10.2023, and the impugned order was issued on 31.12.2023.The petitioner's counsel highlighted two confirmed demands under the impugned order. The first demand was related to the difference in outward turnover between the books of account and various returns. The counsel pointed out that the discrepancy arose due to not reporting all transactions in the GSTR 1 statement initially, which was later rectified by filing the annual return in GSTR 9. The counsel also argued that the tax liability arising from this reconciliation was remitted under DRC-03. Additionally, the counsel mentioned that the tax demand in respect of exempted supply value was erroneous as the exempted supply was interest income exempted under GST enactments.On the other hand, the Government Advocate pointed out that the petitioner failed to provide proper bifurcation of turnover related to its pan-India and Tamil Nadu operations. It was also noted that the petitioner did not appear before the assessing officer for a personal hearing and failed to submit all relevant documents.The Court observed that the petitioner's request for deferment of a personal hearing was not entertained, and the impugned order was issued without providing a personal hearing. The order failed to consider explanations provided by the petitioner regarding turnover discrepancies and exempted sales. Consequently, the Court set aside the impugned order and remanded the matter for reconsideration. The petitioner was given 15 days to submit additional documents, and the respondent was directed to provide a reasonable opportunity for a personal hearing before issuing a fresh order within two months. The writ petition was disposed of without any costs.