Tax Assessment Order Quashed: Procedural Violations Nullify Proceedings, Mandate Fair Hearing and Notice Reissuance

The HC allowed the writ petition challenging a tax assessment order for AY 2017-2018. The court found violations of natural justice, set aside the impugned order, and directed fresh proceedings. The HC ordered lifting of bank account attachment, mandated issuance of a clear notice, and directed the petitioner to file a reply within two weeks, effectively providing an opportunity for a fair hearing.

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Issues:
Challenge to order dated 28.12.2023 for Assessment Year 2017-2018 due to tax liability mismatch, failure to serve physical copy of order, demand for payment, attachment of bank account, violation of natural justice.

Analysis:
The petitioner filed a Writ Petition challenging the order passed by the first respondent for the Assessment Year 2017-2018, alleging a tax liability mismatch. The respondents demanded payment of the differential amount due to the alleged mismatch. The petitioner claimed that they were unaware of the show cause notice issued through the GST Portal and that the physical copy of the notice was not provided to them. The petitioner also highlighted that their bank account was attached, and 20% of the disputed tax liability was already collected by the respondents.

The petitioner's counsel argued that the petitioner was not informed about the proceedings until a Recovery Notice was issued proposing to attach the bank account. The petitioner sought an opportunity to present their case by filing a suitable reply and participating in the proceedings. The respondents' counsel stated that the court could consider passing appropriate orders subject to verifying the payment made by the petitioner.

After hearing both parties and examining the evidence, the court found that the impugned order was passed without affording the petitioner an opportunity for a personal hearing, thus violating the principles of natural justice. Consequently, the court decided to set aside the order dated 28.12.2023 and remand the matter to the first respondent for fresh consideration regarding the assessment period. The court directed the petitioner to file their reply within two weeks and instructed the respondents to issue a clear notice for a personal hearing. The court also ordered the lifting of the bank account attachment and directed the bank to de-freeze the account upon production of the court's order.

In conclusion, the court disposed of the writ petition with the above directions, without imposing any costs. The connected miscellaneous petition was also closed as a result of the judgment.

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