2025 (2) TMI 300 - HC - GST

Tax Assessment Overturned: Improper Notice Invalidates Order, Ensures Taxpayer's Right to Fair Hearing and Objection Process

HC set aside tax assessment order due to improper notice service. Petitioner granted opportunity to respond to tax discrepancies after depositing 25% of ... Challenge to impugned order - claim of excess input tax credit on inward RCM supplies in GSTR 3B than the actual reverse charge liability declared and paid - the petitioner is ready and willing to pay 25% of the disputed tax - HELD THAT:- The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. The impugned order dated 14.11.2023 is set aside - Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include:1. Whether the petitioner was properly notified of the show cause notices and the impugned order of assessment under the Goods and Services Tax Act, 2017.2. Whether the petitioner is entitled to an opportunity to respond to the discrepancies alleged in the tax assessments for the year 2020-21.3. The conditions under which the impugned order dated 14.11.2023 can be set aside and the matter remanded for reconsideration.ISSUE-WISE DETAILED ANALYSIS1. Notification and Service of NoticesThe petitioner contended that neither the show cause notices nor the impugned order of assessment was served in accordance with the proper procedure. Instead, these were uploaded on the GST Portal under 'view additional notices and orders,' which allegedly led to the petitioner's unawareness of the proceedings. The legal framework under the Goods and Services Tax Act, 2017, requires proper service of notices, typically by tender or registered post acknowledgment due (RPAD), to ensure the taxpayer is duly informed and can participate in the adjudication process.The Court considered whether the method of uploading notices on the GST Portal constituted adequate service. The Court's reasoning focused on the necessity for taxpayers to have fair notice and the opportunity to respond to tax assessments, which is a fundamental aspect of due process.2. Opportunity to Respond and Remand ConditionsThe petitioner sought an opportunity to explain alleged discrepancies in the input tax credit claimed versus the reverse charge liability declared. The petitioner's counsel cited a precedent where a similar matter was remanded back to the adjudicating authority upon payment of 25% of the disputed taxes. The Court examined this precedent to determine if it was applicable to the present case.The Court balanced the need for administrative efficiency with the taxpayer's right to be heard. The respondent did not object to providing the petitioner another opportunity to present their case, subject to the payment of 25% of the disputed taxes.3. Setting Aside the Impugned OrderThe Court set aside the impugned order dated 14.11.2023, subject to specific conditions. The petitioner was directed to deposit 25% of the disputed taxes within four weeks. The Court outlined a detailed process for verifying and adjusting any amounts already paid or recovered, ensuring that the petitioner only pays the balance of the 25% after such adjustments.The Court's decision to set aside the order was contingent upon compliance with these conditions. Failure to comply would result in the restoration of the impugned order.SIGNIFICANT HOLDINGSThe Court established several core principles through its judgment:- Proper service of notices is crucial for ensuring due process in tax assessments. Uploading notices on a portal without additional notification may not suffice.- Taxpayers should be given a fair opportunity to respond to discrepancies in tax assessments, especially when procedural irregularities in notification are alleged.- The Court has the discretion to set aside orders and remand matters for reconsideration, provided specific conditions, such as partial payment of disputed taxes, are met.The final determinations included:- The impugned order was set aside, and the matter was remanded for reconsideration, subject to the petitioner depositing 25% of the disputed taxes.- The petitioner was granted the opportunity to submit objections and supporting documents within four weeks, with the impugned order serving as a show cause notice.- The respondent was directed to consider any objections filed and pass orders in accordance with the law, ensuring a reasonable opportunity for the petitioner to be heard.These holdings underscore the importance of procedural fairness and the Court's role in ensuring that taxpayers are not prejudiced by administrative oversights or errors in the notification process.