2024 (8) TMI 948 - HC - GST

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 ... Violation of principles of natural justice - Challenge to assessment order - without assigning any specific or new reasons, the respondent reopened the case and passed the impugned orders for the very same year - excess claim of Input Tax Credit - HELD THAT:- It is an admitted fact that in respect of the issue pertaining to the assessment year 2018-2019, the respondent had already dropped the proceedings after being satisfied with the petitioner's reply submitted by them. Despite this, the respondent reopened the case and issued a show cause notice for the very same assessment year 2018-19, which ultimately ended in passing of the impugned order. Though the petitioner submitted its detailed reply to the said notice, the respondent rejected the same by simply stating 'not satisfied', without giving any adequate or specific reason. Such course adopted by the respondent is contrary to law and in violation of the principles of natural justice. The order dated 29.04.2024 passed by the respondent is set aside and the respondent is directed to pass a detailed order afresh, on merits and in accordance with law, more specifically addressing each grounds raised by the petitioner in their reply. Such an exercise shall be completed within a period of eight (8) weeks from the date of receipt of a copy of this order. This writ petition is disposed of by way of remand. 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.