Assessment order quashed for procedural lapses; petitioner must deposit 25% disputed tax within 30 days under relevant rules

1. ISSUES PRESENTED and CONSIDERED

• Whether the tax demand confirmed under Section 63 of the Goods and Services Tax (GST) Act can exceed the amount specified in the show cause notice under Section 75(7) of the GST Act.
• Validity of the rectification order issued to correct the demand amount and its impact on the original adjudication order.
• Effect of non-response or failure to object by the petitioner to the show cause notice and subsequent orders on the adjudication process.
• Whether the petitioner's failure to challenge the impugned order in a timely manner affects the entitlement to relief.
• Appropriate judicial relief where the petitioner has delayed in exercising statutory rights but seeks intervention against the tax demand and penalties.
• Conditions under which the Court may quash the assessment order and remit the matter for fresh consideration.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the tax demand confirmed under Section 63 can exceed the amount specified in the show cause notice under Section 75(7) of the GST Act

- The legal framework under Section 75(7) of the GST Act clearly stipulates that no demand beyond the amount specified in the show cause notice can be confirmed by the proper officer.

- In the instant case, the show cause notice (Form GST ASMT-14) dated 04.09.2024 specified a total demand of Rs. 1,63,920/-, whereas the order under Section 63 dated 26.11.2024 confirmed a higher demand of Rs. 2,45,880/-.

- The Court noted this discrepancy and examined the rectification order dated 27.11.2024, which explained that the higher demand was due to a clerical error in entering the demand in Form 7.

- The rectification order aimed to correct this error, but the petitioner's failure to object to the notices was construed as acceptance of the proposal, leading to modification of the adjudication order confirming the higher demand.

- The Court emphasized that the statutory mandate under Section 75(7) cannot be bypassed by clerical errors or subsequent rectifications without proper procedure and opportunity to the taxpayer.

- Conclusion: The demand confirmed cannot exceed the amount specified in the show cause notice unless proper rectification procedures are followed with due notice and opportunity to the petitioner.

Issue 2: Validity of the rectification order and its effect on the original adjudication order

- The rectification order dated 27.11.2024 was issued to correct the demand amount entered erroneously in Form 7 by the proper officer.

- The Court observed that the rectification order was treated as an addendum to the show cause notice, and the petitioner was required to file a reply to it.

- The petitioner's failure to object or respond to the rectification order led to the assumption that the petitioner had no objections to the proposed demand.

- The Court held that rectification orders must be issued in accordance with the principles of natural justice, providing the affected party an opportunity to be heard before confirming any revised demand.

- Conclusion: The rectification order stands as an integral part of the adjudication process but must be subject to proper procedure and petitioner's opportunity to respond.

Issue 3: Effect of petitioner's non-response or failure to object on the adjudication process

- The petitioner did not respond to the show cause notice or the rectification order and did not challenge the impugned order within the stipulated time.

- The Court noted that such inaction amounts to waiver of objections and acceptance of the proposed demand under the GST enactments.

- However, the Court also recognized that the petitioner's failure was due to the cancellation of earlier registration and obtaining a fresh registration, leading to oversight of notices posted on the web portal.

- Despite this, the Court emphasized the importance of vigilance and timely exercise of statutory rights by the taxpayer.

- Conclusion: Non-response or failure to object results in confirmation of the demand, but the Court may exercise discretion in appropriate cases to provide relief subject to conditions.

Issue 4: Impact of petitioner's delay in challenging the impugned order on entitlement to relief

- The petitioner's registration was cancelled in June 2018, and a fresh registration was obtained, which contributed to the delay in noticing the GST notices and orders.

- The Court observed that the petitioner had "slept over its rights" by not filing a reply, attending personal hearings, or filing appeals in time.

- Despite this, the Court acknowledged the need to balance strict adherence to procedural timelines with equitable relief in deserving cases.

- Conclusion: Delay in challenging the order weakens the petitioner's position but does not preclude judicial relief if conditions are met.

Issue 5: Appropriate judicial relief where petitioner delayed in exercising statutory rights but seeks intervention against tax demand and penalties

- The Court referred to its established practice of coming to the rescue of taxpayers who have delayed but seek relief by quashing assessment orders on terms.

- In the instant case, the Court quashed the impugned order subject to the petitioner depositing 25% of the disputed tax amount in cash within 30 days.

- The matter was remitted back to the respondent for fresh consideration after the petitioner files a reply to the show cause notice and the rectification order treated as an addendum.

- The Court mandated that the petitioner be heard before any fresh order is passed.

- Conclusion: The Court may grant conditional relief by quashing orders and remitting for fresh adjudication, requiring partial payment and compliance with procedural safeguards.

Issue 6: Conditions under which the Court may quash assessment order and remit matter for fresh consideration

- The Court imposed the condition of depositing 25% of the disputed tax amount from the Electronic Cash Register within 30 days.

- The petitioner must file a reply to the show cause notice and the rectification order within the time stipulated by the respondent.

- The respondent is directed to pass a fresh order on merits expeditiously after hearing the petitioner.

- Failure to comply with these conditions will result in dismissal of the writ petition and the respondent may proceed under the GST enactments and rules.

- Conclusion: Quashing and remittal are contingent upon compliance with payment and procedural conditions, ensuring fairness and adherence to statutory provisions.