2025 (1) TMI 213 - HC - GST

Tax Assessment Voided: Procedural Defect Leads to Notice Restoration and Opportunity to Contest Disputed Taxes

Tvl. R. Jayaramakrishnan Rep. By its Proprietor, Mr. R. Jayaramakrishnan Versus The Deputy State Tax Officer – 1, The Deputy Commissioner (ST), Chennai

HC set aside the impugned tax assessment order due to improper service of notice. The court allowed the petitioner to contest the assessment by depositing ... Vioaltion of principles of natural justice - neither the show cause notices nor the impugned order of assessment has been served on the petitioner by tender or sending it by RPAD - petitioner is ready and willing to pay 25% of the disputed tax - HELD THAT:- The petitioner shall deposit 25% of the disputed tax within a period of two weeks from the date of receipt of a copy of this order. The impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions addressed in this judgment include:Whether the impugned order of assessment dated 19.06.2024, issued by the first respondent, was valid given the alleged lack of proper service of notice to the petitioner.Whether the petitioner should be granted an opportunity to contest the assessment, given the claim of non-receipt of the show cause notice and the impugned order.Whether the petitioner should be allowed to pay 25% of the disputed taxes as a condition for remanding the matter back to the adjudicating authority.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of the Impugned Order of AssessmentRelevant Legal Framework and Precedents: The assessment order was challenged on the grounds of improper service of notice. The legal framework involves the procedural requirements for serving notices under the Goods and Services Act, 2017.Court's Interpretation and Reasoning: The court noted that the petitioner claimed the notices were not served by tender or RPAD, but uploaded on the GST Portal, leading to the petitioner being unaware of the proceedings.Key Evidence and Findings: The petitioner argued discrepancies between taxable supplies reported in GSTR-3B and Form 26AS, which were not addressed due to lack of notice.Application of Law to Facts: The court found merit in the petitioner's claim of non-receipt of notice, impacting their ability to participate in the adjudication process.Treatment of Competing Arguments: The respondents did not object to the petitioner's request for a remand, subject to conditions.Conclusions: The court set aside the impugned order, allowing the petitioner to contest the assessment after depositing 25% of the disputed tax.Issue 2: Opportunity to Contest the AssessmentRelevant Legal Framework and Precedents: The principle of natural justice requires that parties be given a fair opportunity to present their case. The petitioner cited a precedent where similar circumstances led to a remand.Court's Interpretation and Reasoning: The court considered the petitioner's willingness to pay a portion of the disputed tax and the lack of objection from the respondents as grounds for granting an opportunity to contest the assessment.Key Evidence and Findings: The petitioner expressed readiness to comply with conditions for a remand, including payment of 25% of the disputed tax.Application of Law to Facts: The court applied principles of fairness and equity, allowing the petitioner to submit objections to the assessment.Treatment of Competing Arguments: The respondents did not oppose the petitioner's request, facilitating a consensual resolution.Conclusions: The court permitted the petitioner to file objections and present supporting documents, treating the impugned order as a show cause notice.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The impugned order passed by the first respondent dated 19.06.2024 is hereby set aside and this Court is inclined to pass the following orders...'Core Principles Established: The judgment reinforces the necessity of proper service of notices and the right to a fair hearing in tax assessments.Final Determinations on Each Issue: The court set aside the impugned order, allowing the petitioner to deposit 25% of the disputed tax and submit objections, with the assessment order treated as a show cause notice.The judgment emphasizes the importance of procedural fairness in tax proceedings, ensuring parties are adequately informed and given opportunities to contest assessments. The court's decision to remand the matter, subject to conditions, reflects a balanced approach to resolving disputes while safeguarding the petitioner's rights.