Tax Assessment Order Overturned: Procedural Flaws Invalidate Revenue Department's Action Against Trading Company

HC quashed tax assessment order against a trading company due to procedural irregularities. The court found significant defects in the assessment process, including failure to consider the petitioner's submissions and denying a personal hearing. HC directed reassessment within two months, ordered lifting of bank account attachment, and mandated providing a fair opportunity for the petitioner to present their case.

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Issues: Assessment order validity, Input Tax Credit (ITC) availed, personal hearing opportunity, attachment of bank account.

Assessment Order Validity:
The petitioner challenged an assessment order dated 25.05.2023 related to the assessment year 2017-18. The petitioner, engaged in trading dyes and chemicals, faced discrepancies in Input Tax Credit (ITC) between returns filed in Form GSTR-3B and auto-populated GSTR-2A. Despite responding to intimation and a show cause notice, the assessment order was issued without considering the petitioner's submissions.

Input Tax Credit (ITC) Availed:
The sole reason for ITC reversal was the alleged discrepancy between GSTR-3B and 2A returns. The petitioner's explanation and responses to the intimation and show cause notice were disregarded, leading to the assessment order. The High Court noted the failure of the assessing officer to consider the petitioner's reply to the intimation dated 09.12.2022, emphasizing the importance of due process in tax assessments.

Personal Hearing Opportunity:
The petitioner's counsel highlighted that the petitioner had requested an adjournment for a personal hearing, which was not granted before issuing the assessment order. In response, the Additional Government Pleader argued that the petitioner had missed opportunities for personal hearings and contesting the tax demand effectively. The High Court directed the assessing officer to provide a reasonable opportunity to the petitioner, including a personal hearing, before issuing a fresh assessment order within two months.

Attachment of Bank Account:
Following the assessment order, the petitioner's bank account in Kotak Mahindra Bank was attached, and funds were appropriated. However, upon quashing the assessment order, the High Court ordered the lifting of the attachment and directed that the appropriated amounts abide by the outcome of the re-examination by the assessing officer. The judgment resolved the matter by quashing the assessment order, providing the petitioner with a fair opportunity for a personal hearing, and closing related proceedings without imposing costs.

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