Tax assessment order set aside for failing to provide proper notice in regional language to local traders

Madras HC set aside a tax assessment order for violating natural justice principles. The petitioner argued they were unaware of electronic notices due to communication failures and disputed turnover figures reported by municipality. The court found the department failed to verify available documents and relied solely on electronic communication without considering taxpayers' varying technical capabilities. HC emphasized that notices should be issued in regional languages and through multiple modes including post to ensure effective communication. The court criticized issuing English notices to local traders like carpenters and vendors, stating this defeats the purpose of natural justice. Assessment was remanded for fresh consideration with proper hearing opportunity.

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Issues involved:
The issues involved in this case are related to the assessment order passed by the Deputy State Tax Officer, mismatch in turnover reported by Kodaikanal Municipality, communication of notices through electronic mode, compliance with procedural requirements under the GST Act, and the language of communication in official notices.

Assessment Order and Mismatch in Turnover:
The petitioner, a registered contractor, challenged the assessment order claiming that the Kodaikanal Municipality inaccurately reported his turnover in GSTR-7, leading to a significant mismatch with his actual turnover. The petitioner contended that the respondent failed to verify available documents and returns before determining the alleged escaped turnover. The petitioner highlighted previous court orders setting aside similar assessment orders for subsequent years, arguing for the same outcome in this case.

Communication of Notices through Electronic Mode:
The petitioner's counsel argued that many taxpayers, including the petitioner, were unaware of assessment proceedings due to notices being communicated solely through the web portal. Reference was made to Section 169(3) of the GST Act, emphasizing the prescribed modes of communication. The petitioner's reliance on the Act's procedural requirements, particularly Section 144B, underscored the alleged deviations by the Department in following the mandated procedures.

Compliance with Procedural Requirements under the GST Act:
The Department's practice of sending notices electronically was defended by the Additional Government Pleader, citing Rule 142 of the TNGST Rules, 2017. The petitioner's counsel countered, asserting that while returns were filed online, many taxpayers relied on service providers due to limited familiarity with technology. The petitioner's argument was supported by Section 169 of the TNGST Act, emphasizing the uniform electronic communication method adopted by the Department.

Language of Communication in Official Notices:
The Court expressed concerns regarding the language used in official notices, emphasizing the importance of regional language communication for effective understanding by traders. The Court highlighted the principles of natural justice and stressed the need for notices to be issued in regional languages to ensure fairness and compliance. The Court urged the Department to consider alternative communication methods, such as postal services and regional language notices, to facilitate better compliance and reduce unnecessary litigations.

Judgment:
The Court allowed the writ petition, setting aside the impugned assessment order and directing the first respondent to re-do the assessment for the year 2019-20 while providing the petitioner with an opportunity for a hearing. The Court emphasized the promotion of trade and the importance of issuing notices in regional languages to ensure effective communication and compliance. No costs were awarded, and connected Miscellaneous Petitions were closed.

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