2025 (7) TMI 390 - HC - GST

Assessment order set aside for denying email reply consideration and failing to provide personal hearing opportunity

M/s. Shree Balaji Enterprises Versus Joint Commissioner of GST & Central Excise, Chennai South Commissionerate

M/s. Shree Balaji Enterprises Versus Joint Commissioner of GST & Central Excise, Chennai South Commissionerate - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order passed without considering a taxpayer's reply sent by email (instead of uploaded to the designated portal) violates the principles of natural justice and warrants setting aside. 2. Whether a rectification application is the proper remedy to challenge non-consideration of a reply and the absence of a personal hearing, and whether rejection of such rectification for lack of 'error apparent on the face of the record' is justified. 3. Whether, in the circumstances of non-consideration of the reply and absence of personal hearing, remand for fresh consideration subject to directions (including interim payment) is appropriate relief and within the Court's discretion. ISSUE-WISE DETAILED ANALYSIS Issue 1: Assessing Officer's failure to consider the taxpayer's reply sent by email and absence of personal hearing - legal framework Legal framework: Administrative action that affects rights is subject to principles of natural justice, which require that a person affected be given an opportunity to be heard before adverse orders are passed; quasi-judicial authorities must consider representations placed before them. Procedural rules or statutory schemes governing electronic filing/portal use may specify modes of filing but do not displace fundamental fairness unless expressly so provided. Precedent Treatment: The judgment does not rely on or cite prior authorities; accordingly, precedent was not followed, distinguished, or overruled in the decision. The Court's approach is grounded on established principles of natural justice rather than particular case law. Interpretation and reasoning: The Court found on the material that the respondent passed the assessment order without considering the reply that had been sent by the petitioner via email rather than uploaded to the portal, and also without affording a personal hearing. The Court treated the non-consideration of the emailed reply and the omission to provide personal hearing as a breach of natural justice and as rendering the assessment order unsustainable. The Court explicitly recognized that procedural non-compliance (use of email) resulted in non-consideration, but that the core defect was the denial of hearing and consideration of submissions before an adverse order was passed. Ratio vs. Obiter: Ratio - An assessment order passed without considering submissions placed before the authority (even if submitted by non-portal means) and without providing an opportunity of personal hearing violates principles of natural justice and is liable to be set aside. Obiter - Observations on the permissibility of email as an alternative mode of filing, and the proper administrative practice for electronic submissions, are incidental and not necessary to the decision. Conclusions: The Court concluded the assessment order was vitiated by denial of natural justice and non-consideration of the emailed reply, warranting setting aside the impugned assessment. Issue 2: Appropriateness of rectification remedy for challenges based on non-consideration and absence of hearing Legal framework: Rectification applications (seeking correction of an order) are generally confined to the correction of 'errors apparent on the face of the record' and are not intended as a substitute for appeals or revision where substantive or procedural infirmities (such as denial of hearing) exist. Precedent Treatment: The Court did not cite specific precedents but applied the established principle limiting rectification to apparent errors on the face of the record. Interpretation and reasoning: The respondent rejected the rectification application on the ground that rectification is available only for errors apparent on the usual record. The Court agreed with the legal position that the rectification route was inappropriate to rectify a substantive procedural breach that affects adjudication (i.e., non-consideration of reply and absence of personal hearing). The Court distinguished the respondent's reliance on rectification as an effective remedy and held that such an application is not the proper mechanism to cure the denial of opportunity to be heard. Ratio vs. Obiter: Ratio - Rectification is not an appropriate remedy to address substantive procedural breaches (such as denial of personal hearing or non-consideration of submissions), because rectification is limited to correcting errors apparent on the face of the order. Obiter - Comments on administrative practices for handling rectification applications are supplementary. Conclusions: Rejection of the rectification application on the sole ground that rectification is limited to apparent errors was legally sustainable as a proposition, but such rejection did not preclude judicial intervention to set aside the assessment on natural justice grounds. Issue 3: Proper relief - remand for fresh assessment, conditions, and interim measures Legal framework: When a quasi-judicial order is set aside for breach of natural justice, the usual relief is to remit the matter for fresh consideration after affording the aggrieved party an effective opportunity to be heard; courts may impose directions or conditions (including interim deposits) to balance public interest and prevent abuse. Precedent Treatment: No specific authorities were cited; the Court applied equitable remedial principles consistent with administrative law practice. Interpretation and reasoning: The Court accepted the respondent's admission that no personal hearing was provided and the petitioner's willingness to make a partial payment (10% of disputed tax). Balancing the need to vindicate natural justice and administrative finality, the Court set aside the assessment and remanded the matter for fresh consideration. The Court imposed procedural directions: the petitioner must file or upload the reply within three weeks; the Assessing Officer must consider the reply and documents, issue a clear 14-day notice fixing a date for personal hearing, and thereafter pass orders on merits expeditiously. The Court treated the petitioner's offer to pay 10% as a factor justifying remand rather than quashing without remand, but the order did not explicitly condition remand on actual payment; instead, the Court accepted the offer in the operative relief and directed the steps to be followed on remand. Ratio vs. Obiter: Ratio - Where a tax assessment is passed without consideration of submissions and without affording a personal hearing, the appropriate remedy is to set aside the order and remit to the assessing authority with directions to consider the submissions and grant a personal hearing; courts may direct timelines and procedural steps to ensure compliance. Obiter - The Court's acceptance of a specific percentage deposit (10%) as a balancing factor is contextual and not elevated to a binding rule for other cases. Conclusions: The Court remanded the matter for fresh assessment with specific procedural directions (re-filing/upload within three weeks, 14-day clear notice for personal hearing, consideration of all documents, and fresh order on merits), thereby providing tailored relief to cure the natural justice breach while enabling the authority to decide afresh. Cross-references and Interrelations The conclusions under Issue 1 (natural justice breach) directly informed the remedy under Issue 3 (setting aside and remand). Issue 2 (rectification as an improper remedy) was treated as distinct: although the rectification application was correctly rejected on its limited scope, that procedural rejection did not absolve the authority from the duty to provide a hearing or consider submissions, thereby necessitating judicial intervention as articulated under Issue 3.