2025 (3) TMI 939 - HC - GST

Tax Assessment Order Overturned: Notice Defects Invalidate Proceedings, Petitioner Granted Opportunity to Respond and Challenge Disputed Taxes

Tvl. Klariti Opticals Versus The Assistant Commissioner (ST) (FAC), Chennai

The SC remanded a tax assessment order after finding inadequate notice to the petitioner. The court set aside the original order, requiring the petitioner ... Violation of principles of natural justice - non-service of notices and orders - petitioner was unaware of the initiated proceedings and thus unable to participate in the adjudication proceedings - 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 respondents, within a period of four weeks from the date of receipt of a copy of this order. The impugned order is set aside - Petition allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include: Whether the petitioner was given adequate notice and opportunity to respond to the discrepancies identified between GSTR-2A and GSTR-3B for the assessment year 2019-20. Whether the impugned order dated 19.08.2024 should be set aside and the matter remanded for reconsideration, subject to conditions. The appropriate conditions under which the petitioner could be allowed to present objections to the assessment order.ISSUE-WISE DETAILED ANALYSIS1. Adequacy of Notice and Opportunity to Respond Relevant Legal Framework and Precedents: The Goods and Services Tax Act, 2017, mandates that taxpayers be given notice and an opportunity to be heard before any adverse order is passed. The petitioner referenced a recent judgment in a similar case where the matter was remanded due to inadequate notice. Court's Interpretation and Reasoning: The Court recognized that although notices were uploaded to the GST Portal, the petitioner claimed unawareness of the proceedings. The Court found merit in the argument that the petitioner was not adequately informed, which justified reconsideration. Key Evidence and Findings: The petitioner did not respond to the notice or appear for the personal hearing, which led to the passing of the impugned order. However, the petitioner argued that the lack of awareness of the proceedings was due to the manner of notification. Application of Law to Facts: The Court applied the principle of natural justice, emphasizing the need for a fair opportunity to respond to discrepancies before finalizing an assessment order. Treatment of Competing Arguments: The respondent did not object to the petitioner's request for remand, acknowledging the potential oversight in communication. Conclusions: The Court concluded that the petitioner should be given another opportunity to present their case, subject to certain conditions.2. Remanding the Matter and Conditions for Reconsideration Relevant Legal Framework and Precedents: The Court referred to its previous decision in a similar case where the matter was remanded subject to the payment of a portion of the disputed tax. Court's Interpretation and Reasoning: The Court determined that setting aside the impugned order and remanding the matter would be just, provided the petitioner complied with specific conditions to ensure the seriousness of the reconsideration process. Key Evidence and Findings: The petitioner expressed willingness to pay 25% of the disputed taxes as a condition for reconsideration, a proposal not opposed by the respondent. Application of Law to Facts: The Court applied principles from previous judgments to establish a fair condition for remand, balancing the need for compliance with the petitioner's right to a fair hearing. Treatment of Competing Arguments: The Court noted the agreement between both parties on the proposed conditions for remand. Conclusions: The Court ordered the setting aside of the impugned order, subject to the petitioner depositing 25% of the disputed taxes and fulfilling other procedural requirements.SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court emphasized, 'Failure to comply with the above condition viz., payment of 25% of disputed taxes within the stipulated period... shall result in restoration of the impugned order.' Core Principles Established: The judgment reinforced the principle of natural justice, requiring adequate notice and opportunity to respond before finalizing tax assessments. It also highlighted the Court's discretion to impose conditions for remand to ensure compliance and seriousness in addressing discrepancies. Final Determinations on Each Issue: The impugned order was set aside, with the case remanded for reconsideration. The petitioner was required to deposit 25% of the disputed taxes and submit objections within specified timeframes, failing which the original order would be reinstated.