Tax Assessment Overturned: Cyclone-Impacted Taxpayer Denied Fair Hearing, Order Invalidated with Opportunity to Resubmit Evidence

HC found a breach of natural justice in the tax assessment order. The petitioner was unable to attend a hearing due to a cyclone and was denied opportunity to present supporting documents. The court set aside the order, directing the petitioner to remit a specified amount and submit additional evidence, with the tax authority required to reconsider the case and issue a fresh order within two months.

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Issues involved:
Assessment order challenged on breach of natural justice principles.

Summary:

Issue 1: Breach of natural justice principles
The petitioner, engaged in business with a thin margin, contested an assessment order claiming that the tax liability was covered by Input Tax Credit (ITC). After receiving a show cause notice and replying, a personal hearing was scheduled but could not be attended due to a cyclone. The impugned order imposing tax liability was issued without considering the petitioner's submissions and inability to attend the hearing due to unforeseen circumstances.

Issue 2: Opportunity for presenting documents
The petitioner had indicated willingness to provide relevant documents to establish the availing of ITC for genuine purchases. Despite the reversal of ITC and imposition of tax liability, the petitioner agreed to remit a specified amount as a condition for reconsideration.

Issue 3: Judicial review of the impugned order
Upon examination, it was found that tax liability was imposed due to the petitioner's failure to annex documents with the reply. The court noted the petitioner's assertion that outward supplies did not attract tax liability after offsetting ITC, and that necessary documents were available. Consequently, the court set aside the impugned order on the condition that the petitioner remit the specified sum towards the disputed tax liability and submit additional supporting documents within a stipulated period.

Conclusion:
The High Court allowed the petition on the condition that the petitioner remits the specified amount and provides additional documents within the given timeframe. The respondent was directed to afford a reasonable opportunity, including a personal hearing, and issue a fresh order within two months of receiving the additional documents. The case was disposed of with no costs incurred.

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