Assessment order set aside for non-application of mind and violation of natural justice principles

HC set aside assessment order dated 30.06.2023 for non-application of mind and violation of natural justice principles. Court found the order was non-speaking and failed to address petitioner's detailed objections. Assessment order treated as show cause notice with petitioner directed to appear before respondent on 03.10.2024 to submit objections with documentary evidence. Respondent ordered to pass speaking order after affording reasonable hearing. Rectification petition writ dismissed as nothing survived for adjudication after main assessment order was set aside.

---

---

Issues Involved:

1. Validity of the impugned order of assessment dated 30.06.2023.
2. Non-consideration of objections and issuance of a non-speaking order.
3. Specific defects in the audit report, particularly Defect No.12 and Defect No.27.
4. Consequences of setting aside the impugned order on the rectification petition.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Order of Assessment:

The petitioner challenged the impugned order of assessment dated 30.06.2023, arguing that it was passed without adequately addressing the objections raised by the petitioner. The petitioner contended that the order suffered from non-application of mind and was a non-speaking order. The court noted that the order confirmed 31 out of 38 defects identified in the audit report without providing sufficient reasoning for rejecting the petitioner's detailed objections.

2. Non-consideration of Objections and Issuance of a Non-speaking Order:

The petitioner argued that the impugned order was issued in haste and without proper consideration of the objections. The petitioner highlighted that the order merely stated that the objections were "not convincing and are not acceptable," without providing any substantive reasoning. This lack of detailed reasoning was a key point in the petitioner's challenge, asserting that the order was non-speaking and lacked application of mind.

3. Specific Defects in the Audit Report:

- Defect No.12: The petitioner challenged the rejection of the Input Tax Credit (ITC) claim for the assessment year 2018-2019, which was based on the premise that the ITC was blocked in the financial year 2017-2018. The petitioner provided detailed objections, including documentary evidence, to demonstrate that the ITC was correctly availed. However, the respondent rejected the objection without adequate reasoning.

- Defect No.27: This defect related to discrepancies in ITC availed in the electronic credit ledger, with differences noted between GSTR-3B, GSTR-2A, and GSTR-9. The petitioner argued that the ITC was availed based on tax invoices as per Section 16 of the CGST/TNGST Act 2017. The petitioner cited several judgments supporting their position that ITC should be allowed based on documents, not solely on GSTR-2A. The respondent dismissed these objections without proper justification, further demonstrating non-application of mind.

4. Consequences of Setting Aside the Impugned Order on the Rectification Petition:

The court set aside the impugned order of assessment dated 30.06.2023, treating it as a show cause notice. The petitioner was directed to appear before the respondent and submit objections with relevant documentary evidence. The respondent was instructed to consider these objections and pass a speaking order after providing a reasonable hearing. Consequently, the related writ petition challenging the rectification order was rendered moot and closed, as the primary order was set aside.

Overall, the judgment emphasized the need for a thorough and reasoned consideration of objections in tax assessments, highlighting procedural fairness and adherence to legal standards.

---