2024 (5) TMI 653 - HC - GST

Trader Wins Challenge: Tax Assessment Overturned for Improper Evaluation of Submitted Documents and Returns

Tvl. Murugesan Kesavan Versus State Tax Officer, Chennai

The HC quashed assessment orders issued against a provision store trader on best judgment basis. The court found the orders improperly disregarded filed ... Validity of assessment order - petitioner had filed returns periodically as mandated by applicable GST enactments, but that the impugned assessment orders were issued on best judgment basis - disregard of documents filed - HELD THAT:- The petitioner expressly asserted that returns were filed for each of the relevant assessment years. The assessment orders also record the statement of the petitioner that he filed GST returns on monthly basis without default. The said assessment orders also refer to the reply dated 01.06.2023 of the petitioner, and the petitioner has placed the said reply on record. On perusal thereof, it is clear that the petitioner has enclosed about seven documents. The tax demand and penalty were confirmed entirely on the basis of the statement recorded on 26.09.2022. Prima facie, such statement appears to be based on the stock position as on that date. Since the impugned assessment orders did not take into account the returns, the reply ad the documents annexed thereto, these orders are not sustainable. Thus, the orders impugned herein are quashed and these matters are remanded for re-consideration. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh reasoned assessment order after taking into account all relevant materials - petition disposed off. Issues involved: Challenge to assessment orders based on best judgment basis and disregarding filed returns and documents.Summary:In the present case, the petitioner, who runs a provision store, challenged assessment orders issued for distinct assessment periods. The petitioner trades in various products and was subjected to a surprise inspection leading to a recorded statement, which the petitioner claimed was coerced. The impugned orders were issued despite the petitioner filing returns periodically as required by GST enactments.The petitioner's counsel challenged the orders on two grounds. Firstly, that the assessment was done on a best judgment basis despite regular filing of returns. Secondly, the petitioner's submitted documents were disregarded in the assessment process. The respondent, through the Additional Government Pleader, stated that the petitioner admitted liability during the inspection.The assessment orders acknowledged that the petitioner filed returns regularly without default and enclosed multiple documents with the replies. However, the orders primarily relied on the statement recorded during the inspection to confirm tax demand and penalty, disregarding the returns, reply, and documents provided by the petitioner.Consequently, the Court quashed the impugned orders and remanded the matters for re-consideration. The assessing officer was directed to provide a reasonable opportunity to the petitioner, conduct a fresh assessment taking into account all relevant materials, and issue a reasoned assessment order within three months from the date of the Court's order. The cases were disposed of with no costs incurred.