Tax Challenge Upheld: 10% Deposit Required, Fresh Hearing Ordered with Three-Month Resolution Timeline

The HC allowed the challenge to a tax demand, finding insufficient opportunity for contest due to GST registration cancellation. The court remanded the matter for reconsideration, requiring the petitioner to deposit 10% of the disputed tax demand. The respondent was directed to provide a personal hearing and issue a fresh order within three months, balancing procedural fairness with tax compliance.

---

---

Issues:
Challenge to tax demand due to lack of reasonable opportunity for contesting, Compliance with principles of natural justice, Remand for reconsideration with condition of remitting 10% of disputed tax demand.

Analysis:

1. Challenge to Tax Demand: The petitioner challenged an order dated 31.12.2023, claiming they did not have a reasonable opportunity to contest the tax demand due to the cancellation of their GST registration. The petitioner argued that they were unaware of the proceedings as their registration was canceled in 2020. The court acknowledged the cancellation but noted that the petitioner was notified about discrepancies in returns through Form ASMT 10. The court found merit in the petitioner's claim and decided to provide an opportunity to contest the tax demand on terms, with the petitioner agreeing to remit 10% of the disputed tax demand.

2. Compliance with Principles of Natural Justice: The respondent argued that the principles of natural justice were complied with as the impugned order referred to a notice in Form ASMT 10 and a show cause notice dated 29.09.2023. The court considered this argument but also took into account the petitioner's situation of not monitoring the GST portal due to the registration cancellation. Despite finding compliance with natural justice principles, the court decided to set aside the order and remand the matter for reconsideration, emphasizing the importance of providing a reasonable opportunity to the petitioner, including a personal hearing.

3. Remand for Reconsideration with Condition: The court set aside the impugned order and remanded the matter for reconsideration with a condition that the petitioner remit 10% of the disputed tax demand within three weeks. The petitioner was allowed to submit a reply to the show cause notice within this period. Upon receipt of the reply and confirmation of the remittance, the respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months. The court disposed of the writ petition without any order as to costs, closing connected miscellaneous petitions.

---