Tax Assessment Voided: Authority Must Provide Fair Hearing and Reconsider Demand with Procedural Transparency

The SC found breach of natural justice in tax assessment proceedings. The court quashed the assessment orders, directing the tax authority to provide proper hearing opportunities. The petitioner was required to remit 10% of the disputed tax demand, and the matter was remanded for reconsideration with specific procedural guidelines, including a reasonable personal hearing and fresh assessment orders within a defined timeframe.

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Issues:
Assessment orders challenged on the ground of breach of natural justice.

Analysis:
The petitioner claimed unawareness of proceedings until the bank notified about an attachment order, arguing that notices were only uploaded on the GST portal without direct communication. The petitioner highlighted a reminder for a personal hearing issued shortly before the reply deadline, emphasizing the lack of a hearing before the assessment order.

The Additional Government Pleader for the respondent contended that the petitioner had sufficient opportunities, citing intimation, show cause notice, and multiple personal hearing offers. The timeline of events showed initiation in November 2020, with subsequent notices leading to the assessment order in July 2023. While acknowledging the petitioner's registration under GST statutes, the court found the lack of adequate time for a personal hearing and confirmed that the petitioner was not heard.

Upon the petitioner's agreement to remit 10% of the disputed tax demand for each assessment year, the court deemed it just and necessary to allow the petitioner to contest the tax demand under certain conditions. Consequently, the impugned orders were quashed, and the matters were remanded for reconsideration by the assessing officer. The petitioner was granted a specified period to reply to the show cause notice and remit the agreed amount, after which the assessing officer was directed to provide a reasonable opportunity for a personal hearing and issue fresh assessment orders within a stipulated timeframe. The court also ordered the release of bank attachments due to the quashing of assessment orders.

In conclusion, the writ petitions were disposed of with the specified terms, with no costs imposed, and connected miscellaneous petitions were closed accordingly.

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