Tax Assessment Order Quashed Due to Procedural Flaws in ITC Claim, Petitioner Granted Opportunity to Respond Within Two Weeks

HC set aside tax assessment order involving improper Input Tax Credit (ITC) claim on motor vehicles. Court found procedural irregularities in notice service and directed tax authority to reconsider the case, allowing petitioner two weeks to submit reply. Assessment order was quashed without costs, emphasizing fair hearing principles under GST legislation.

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Issues:
Challenge to assessment order under CGST/TNGST Act, 2017 for financial year 2022-23; Claim of Input Tax Credit (ITC) on ineligible purchases; Allegations of wrongful ITC claim; Lack of awareness of notices due to GST portal feature; Request for quashing assessment order.

Analysis:
The petitioner, a registered dealer under CGST and TNGST Acts, mistakenly claimed ITC on the purchase of four motor cars, which was ineligible under Section 17(5) of the CGST/TNGST Act, 2017. Upon realizing the error, the petitioner promptly reversed the ITC amount. Despite this, the first respondent issued scrutiny, pre-show cause, and show cause notices, leading to the impugned assessment order demanding the reversed ITC, penalties, and interest. The petitioner claimed unawareness of the notices due to a new feature on the GST portal and sought to quash the assessment order based on the expired statutory appeal period.

The court noted that the petitioner erroneously claimed ITC on personal use vehicles, which was not permissible under the law. The petitioner voluntarily rectified the mistake by reversing the ITC in the subsequent return. However, the assessment order was passed without considering the petitioner's response to the notices issued. The court acknowledged the petitioner's lack of awareness of the notices and decided to set aside the order, remanding the matter to the first respondent for fresh consideration. The petitioner was directed to file a reply to the show cause notice within two weeks, and the respondent was instructed to consider the reply, conduct a personal hearing, and pass appropriate orders expeditiously.

In conclusion, the court disposed of the writ petition without costs, setting aside the assessment order and providing the petitioner with an opportunity to present their case before the first respondent. The judgment emphasized the need for procedural fairness and the right to be heard in matters of tax assessments under the CGST/TNGST Act, 2017.

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