Tax Authority Reopens Assessment Without New Evidence, Violating Principles of Natural Justice and Procedural Fairness

HC found tax authority violated natural justice by reopening proceedings for the same assessment year without new reasons. The court set aside the demand order and directed respondent to issue a detailed order addressing petitioner's grounds within eight weeks, ensuring fair consideration of submissions made during tax assessment.

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Issues:
Reopening of case for the same assessment year after dropping proceedings, Violation of principles of natural justice in issuing demand order without specific reasons, Petitioner seeking to quash orders and reconsider submissions made.

Analysis:
The petitioner, engaged in the Tea Industry and registered under the Tamil Nadu Goods and Services Tax (TNGST) Act, faced discrepancies in tax return for 2018-2019. The respondent issued a show cause notice alleging incorrect tax liability declaration and excess Input Tax Credit (ITC) claim. After the petitioner's reply and supporting documents, the respondent dropped proceedings. However, a subsequent notice was issued for the same year, leading to a demand order under Section 73(9) of TNGST/CGST Acts, 2017, without due consideration of petitioner's detailed reply.

The petitioner contended that the respondent reopened the case without new reasons, violating natural justice principles by not addressing grounds raised in the reply. The respondent's actions were deemed contrary to law. The learned counsel sought to quash the impugned orders and requested reconsideration based on the earlier dropped proceedings and detailed submissions made by the petitioner.

In response, the Government Advocate (Taxes) supported the orders passed by the respondent. After hearing both sides and reviewing the records, the court noted that despite dropping proceedings earlier, the respondent reopened the case for the same assessment year, issuing a demand order without specific reasons, thereby violating natural justice principles. Consequently, the court set aside the order dated 29.04.2024 and directed the respondent to pass a detailed order addressing each ground raised by the petitioner within eight weeks from the date of receipt of the order.

The court concluded by disposing of the writ petition on the above terms, without any costs, and closed the connected miscellaneous petitions.

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