2024 (4) TMI 759 - HC - GST

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

Tvl. Periyasamy Chandran Versus The Deputy State Tax Officer (ST) 1, Theni., The Commissioner, Kodaikanal

Madras HC set aside a tax assessment order for violating natural justice principles. The petitioner argued they were unaware of electronic notices due to ... Violation of principles of natural justice - petitioner submits that in most of the cases, the assessees are not aware of the show cause notices and assessment orders due to lack of communication through post - grievance of the petitioner is that the respondent without verifying the documents and returns, which are very much available in the web portal has passed the impugned order stating the escaped turnover of the petitioner - HELD THAT:- The case of the petitioner is that notice sent by the Department through the electronic mode has not been noticed by the petitioner and therefore, he could not reply in time. The petitioner has valid ground to substantiate that there is no mismatch that the Kodaikanal Municipality has wrongly reported the petitioner's turnover in GSTR-7 as Rs. 1,79,99,069/-, when the petitioner's actual turnover is of Rs. 15,14,204/-. When option is available to the Department to prefer any mode of communication as per Section 169 of the TNGST Act, 2017, the Department has preferred only electronic mode of communication. Any decision taken by the Department would affect the traders and their business. The Department cannot expect that all the traders/tax payers are accustomed with the portal and they are filing their returns on their own - The Department shall work out on the possibility of issuing notice and other communications through postal and that too, in a regional language, which certainly enables the tax payers to respond in time and the same will definitely reduce the unnecessary litigations before this Court. Hope, the Department shall consider the fact that all the tax payers are not filing the returns on their own and they are depending upon some service providers for the same. The Government, which is promoting our Tamil language in Tamil Nadu, is taking action against the traders, like carpenters, cooks, vegetable vendors by issuing notice in English language. The object of issuing notice is based on the principles of natural justice. “No one should be punished unheard”. This object can be achieved only when the notices are issued in Regional languages - This Court once again reiterates that the intention of any Government must be to promote the trade and not to curtail the same. While initiating action as against the traders, which would affect them adversely, the Department has to work out the possibility of issuing the notice in a regional language and also through post and phone, text message so that the traders can have the real opportunity. Otherwise, it would be an empty formality. The impugned order passed by the first respondent is set aside and the first respondent shall re-do the assessment for the year 2019-20 by providing an opportunity of hearing to the petitioner - the writ petition is allowed. 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.