2024 (7) TMI 595 - HC - GST

Tax Assessment Order Overturned: Procedural Flaws Expose Critical Compliance Gaps in Revenue Collection Process

HC quashed the assessment order after finding procedural irregularities in tax demand. Petitioner must pay 10% of disputed tax and is granted opportunity ... Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand - violation of principles of natural justice - HELD THAT:- On perusal of the impugned order, it appears that three issues were dealt with therein. Of these, a substantial portion of the claim relates to belated filing of returns and the consequential denial of Input Tax Credit. Since such order was issued without the petitioner being heard, albeit by putting the petitioner on terms, interference is necessary. The impugned order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order. Within such period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt of the petitioner's reply and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner's reply. Petition disposed off. Issues Involved:Challenge to assessment order based on lack of reasonable opportunity to contest tax demand.Analysis:The petitioner, a contractor and registered under GST enactments, challenges an assessment order dated 13.09.2023, claiming he was not given a fair opportunity to contest the tax demand. The petitioner, represented by counsel, argues that a significant part of the demand is related to late filing of returns and denial of Input Tax Credit under Section 16(4) of GST laws. The petitioner, through instructions, agrees to pay 10% of the disputed tax demand for a remand. On the other hand, the Government Advocate contends that the petitioner had adequate chances to contest the demand, having received prior intimation, a show cause notice, and reminders. The petitioner asserts that his auditor's illness, who was handling GST compliances, led to him being unaware of the proceedings culminating in the impugned order.The High Court, after considering the submissions, quashes the impugned order subject to the condition that the petitioner pays 10% of the disputed tax demand within two weeks. Additionally, the petitioner is allowed to respond to the show cause notice within this period. Upon receiving the reply and the 10% payment, the respondent is directed to provide a fair opportunity to the petitioner, including a personal hearing, and issue a fresh order within two months. The case is disposed of with no costs, and related applications are closed.