2025 (3) TMI 323 - HC - GST

Ex parte assessment order invalidated for lack of reasons; fresh assessment allowed with a hearing opportunity under CGST/DGST Act 2017.

VIJAY GAUR Versus DELHI STATE GOODS AND SERVICE TAX, GOVT. NCT OF DELHI & ANR.

The HC quashed the ex parte assessment order dated 19 March 2024, issued by the Assessing Officer (AO) under the CGST/DGST Act, 2017, due to the AO's ... Violation of principles of natural justice - validity of ex parte assessment order issued by the Assessing Officer (AO) without assigning and disclosing reasons - HELD THAT:- The order solely rests on a failure on the part of the taxpayer to respond to the Show Cause Notice [SCN] which had been issued. It is opined that irrespective of whether the assessee had chosen to submit a response to the SCN which was issued or not, the AO was clearly obliged in law to assign and disclose reasons before finalizing the assessment. As is ex facie evident from a reading of the order of 19 March 2024, the order clearly fails to meet those tests. Petiton allowed. The issues presented and considered in the judgment are as follows:1. Whether the ex parte assessment order issued by the Assessing Officer (AO) without assigning and disclosing reasons is valid under the law.2. Whether the writ petitioner is entitled to have the impugned order dated 19 March 2024 quashed by the court.Issue-wise detailed analysis:The relevant legal framework and precedents indicate that under the CGST/DGST Act, 2017, an Assessing Officer is required to provide the taxpayer with an opportunity to respond to a Show Cause Notice (SCN) before finalizing an assessment. The failure to respond to the SCN does not absolve the AO from the obligation to provide reasons for the assessment. The court's interpretation and reasoning in this case highlight that the AO's ex parte assessment order lacked justification as it solely relied on the taxpayer's failure to respond to the SCN. The court found that the AO was obligated to provide reasons for the assessment, regardless of the taxpayer's response to the notice.Key evidence and findings in the judgment include the ex parte assessment order issued by the AO, which detailed the tax amount, interest, and penalty imposed on the taxpayer without any response from the taxpayer. The court noted that the order failed to meet the legal requirements of providing reasons for the assessment.The application of the law to facts in this case involved the court determining that the ex parte assessment order was invalid due to the lack of reasons provided by the AO. The court concluded that the order was unsustainable and proceeded to quash it.Competing arguments were not explicitly mentioned in the judgment, but it can be inferred that the respondent may have argued in favor of upholding the ex parte assessment order based on the taxpayer's failure to respond to the SCN.Significant holdings:The court held that the ex parte assessment order dated 19 March 2024 was quashed due to the AO's failure to provide reasons for the assessment. The court further directed that the respondents have the right to issue a fresh order of assessment after affording the writ petitioner an opportunity to be heard. All rights and contentions of the parties on merits were kept open for further consideration.In conclusion, the court found that the ex parte assessment order was invalid as it did not comply with the legal requirement of providing reasons for the assessment. The court quashed the order and allowed the writ petition, granting the respondents the opportunity to issue a fresh assessment order with proper adherence to procedural requirements.