2025 (8) TMI 1388 - HC - GST

Best-judgment assessment under s.62(1) deemed withdrawn when valid returns, tax and late fee paid within 30 days

JPR Projects Versus The State Of Andhra Pradesh, The Assistant Commissioner ST, Appellate Authority, Additional Commissioner (ST).

JPR Projects Versus The State Of Andhra Pradesh, The Assistant Commissioner ST, Appellate Authority, Additional Commissioner (ST). - TMI 1. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order passed under Section 62(1) of the GST Act is deemed to be withdrawn under Section 62(2) upon the registered person furnishing a valid return and payment of tax and late fee as prescribed? 2. Whether the deemed withdrawal under Section 62(2) is contingent upon the registered person intimating the filing/payment to the proper officer or whether the operation of the deeming clause is automatic by operation of law once statutory conditions are complied with? 3. Whether any tax adjusted against a taxpayer's input tax credit pursuant to a Section 62(1) assessment must be restored when the assessment order is deemed withdrawn under Section 62(2), and the timeframe for completing such reversal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether an assessment order under Section 62(1) is deemed withdrawn upon filing a valid return and payment of tax and late fee under Section 62(2). Legal framework: Section 62(1) permits best judgment assessment where a registered person fails to furnish returns after notice. Section 62(2) provides that where the registered person furnishes a valid return within the period specified after service of the assessment order, the assessment order 'shall be deemed to have been withdrawn' while liability for interest under section 50(1) or late fee under section 47 continues. The provision as quoted in the judgment includes a bracketed reference to 'sixty days' and a proviso permitting an extension on payment of additional late fee. Precedent Treatment: No prior decisions or authorities were cited or considered by the Court in the judgment; no precedents were followed, distinguished or overruled. Interpretation and reasoning: The Court examined Section 62(2)'s deeming language and concluded that, upon compliance with the statutory conditions (furnishing a valid return and payment of tax and late fee within the prescribed period), the assessment order passed under Section 62(1) is deemed to have been withdrawn by operation of law. The Court treated the deeming clause as self-executing and not subject to any additional procedural precondition beyond those expressly stipulated in the provision. Ratio vs. Obiter: Ratio - The Court's holding that compliance with Section 62(2) results in automatic withdrawal of the assessment order (subject to continuing interest/late fee liabilities) is a core legal determination necessary to the disposition of the writ petition. There is no obiter discussion on alternative interpretations. Conclusions: The Court concluded that the assessment order dated 07.02.2024 was deemed withdrawn because the petitioner had furnished the returns and paid the tax and late fee as required under Section 62(2), thereby negating the tax demand founded on that assessment order. Issue 2: Whether the deeming effect under Section 62(2) requires intimation to the proper officer for activation, or is automatic upon statutory compliance. Legal framework: Section 62(2) specifies the consequences of furnishing a valid return within the prescribed period following service of an assessment order; it does not state any requirement of separate intimation to the proper officer as a precondition to the deeming effect. Precedent Treatment: No external authority was relied upon; the Court addressed the statutory text directly. Interpretation and reasoning: The Court held that there is 'no stipulation that the deeming clause would come into effect only after intimation to the proper officer.' The proper officer's failure to be informed does not prevent the operation of the deeming provision once the taxpayer complies with its terms. The Court rejected the respondent's view that absence of intimation preserves the tax demand. Ratio vs. Obiter: Ratio - The Court's determination that the deeming provision operates automatically upon compliance, without requirement of separate intimation, is central to the outcome and is therefore ratio. Conclusions: The Court concluded that the assessment order could not be relied upon for tax recovery where the taxpayer had satisfied the conditions in Section 62(2), irrespective of whether the proper officer had been separately notified. Issue 3: Restoration of input tax credit adjusted against the assessment and timeframe for reversal. Legal framework: Where an assessment order is deemed withdrawn under Section 62(2), the legal consequence is that no tax can be collected on the basis of such an order. The judgment treats adjustments made against input tax credit as impermissible once the underlying assessment is deemed withdrawn. Precedent Treatment: No precedent discussed. Interpretation and reasoning: The Court noted that an amount of Rs.12,92,346/- had been adjusted against the petitioner's input tax credit towards recovery of the tax raised under the now-deemed-withdrawn assessment. Because the assessment is deemed withdrawn, the Court reasoned that the debit entry effected against the petitioner must be reversed and the tax credit restored. Ratio vs. Obiter: Ratio - The direction to reverse the debit entry and restore the input tax credit within a specified period is an operative remedy flowing from the Court's principal holding and is therefore part of the ratio. Conclusions: The Court ordered that the debit adjustment against input tax credit be reversed and the credit restored within four weeks from the date of the order. The Court set aside the assessment order and left open the respondent's right to reassess if the respondent considers it necessary. Cross-references and ancillary points 1. Cross-reference to Issue 1 and Issue 2: The Court's conclusion that the assessment order is deemed withdrawn upon compliance (Issue 1) is directly linked to its rejection of any requirement of intimation to the proper officer (Issue 2). 2. Relief and consequential directions: The Court set aside the assessment order, directed restoration of adjusted input tax credit within four weeks, and left open the administrative option for the proper officer to initiate assessment proceedings afresh if warranted.