Tax Order Quashed: Procedural Flaws Invalidate Assessment, Mandate Fair Hearing and Comprehensive Review of Submissions

HC found procedural irregularities in tax order dated 08.12.2023 under KGST/CGST Act. Order was quashed due to lack of proper hearing, inadequate consideration of petitioner's reply, and mechanical processing. Court directed fresh proceedings, requiring 1st respondent to conduct fair hearing and review submissions, while preserving all substantive contentions for future adjudication.

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Issues:
Challenge to constitutionality of Section 16 (2) (c) of CGST/SGST Acts, Request for setting aside an order dated 08.12.2023 under KGST/CGST Act, Failure to consider petitioner's reply, Lack of personal hearing granted, Allegation of passing order in a mechanical manner.

Analysis:
The petitioner filed a writ petition challenging the constitutionality of Section 16 (2) (c) of the CGST/SGST Acts and sought various reliefs, including setting aside an order dated 08.12.2023 under the KGST/CGST Act. The petitioner's counsel, however, withdrew the challenge to Section 16 (2) (c) and requested the court to consider setting aside the impugned order and direct the respondent to review the petitioner's reply dated 10.11.2023. The petitioner, engaged in supplying goods and services, received a show cause notice under the KGST and CGST Acts, to which they responded. The 1st respondent then passed an order on 08.12.2023 determining tax, interest, and penalty, leading to the filing of the writ petition.

The court noted discrepancies in the order, as it was signed by a different officer than the one mentioned on the first page. It highlighted that the petitioner's reply was not adequately considered, as it was dismissed as general without addressing specific contentions. The petitioner had requested a personal hearing, which was not granted, contrary to the provision in Section 75(4) of the KGST Act requiring a hearing upon a written request. The court observed that the order was passed mechanically without due consideration of the petitioner's submissions, indicating a lack of application of mind by the 1st respondent.

Consequently, the court partially allowed the writ petition, quashing the order dated 08.12.2023 and directing the petitioner to appear before the 1st respondent for further proceedings without the need for additional notice. The 1st respondent was instructed to conduct proceedings in accordance with the law upon the petitioner's appearance. Additionally, the court ordered the Commissioner of Commercial Taxes to ensure officials are aware of the need to pass orders in compliance with the law and not mechanically. All contentions of the parties were left open for future consideration.

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