Tax Assessment Voided Due to Improper Notice Delivery, Petitioner Granted Opportunity to Respond and Challenge Disputed Tax

HC found procedural irregularities in tax assessment proceedings. Despite email notices, physical notices were undelivered. The court set aside the tax demand, remanded the matter for fresh adjudication, and granted the petitioner three weeks to respond to show cause notices. The petitioner was required to deposit 10% of disputed tax before filing objections.

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Issues:
Violation of principles of natural justice in tax assessment proceedings.

Analysis:
The petitioner, a registered dealer under the CGST Act, had their registration cancelled, leading to tax assessment for the period from October 2017 to March 2019. Despite notices sent via email, physical notices for personal hearing were returned, indicating lack of response. The tax authority proceeded with assessment and confirmed a demand of Rs. 46,77,312. The petitioner challenged the order, alleging violation of natural justice due to non-receipt of physical notices.

The court considered the contention of non-receipt of physical notices by the petitioner and the argument that notices sent to the registered email were sufficient. The cancellation of registration and returned physical notices should have prompted the tax authority to ensure proper service. The court noted the ambiguity and granted the petitioner an opportunity to present their case. The impugned order was set aside, and the matter was remanded for adjudication by the tax authority.

The court deemed the present proceedings as notice to the petitioner, allowing them three weeks to respond to the show cause notices. A personal hearing was scheduled, with provisions for seeking additional time if needed. The petitioner was required to pay 10% of the disputed tax before filing objections due to the belated approach to the court. No costs were awarded, and pending interlocutory applications were closed as a result of the judgment.

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