2025 (9) TMI 1452 - HC - GST

Impugned assessment order quashed and matter remitted for fresh adjudication; petitioner to deposit 25% tax from ECR within 30 days

The HC quashed the impugned assessment order dated 12.02.2025 and remitted the matter to the 2nd Respondent for fresh adjudication. The remand is ... Demand against the Petitioner merely because the Petitioner failed to respond to the SCN in GST DRC-01 dated 31.07.2024 - HELD THAT:- It is noticed that under similar circumstances, this Court has come to the rescue of the persons like the Petitioner by quashing the impugned Assessment Order on terms subject to the Petitioner depositing 25% of the disputed tax. I do not find any reason to take a different stand in this case. Considering the same, the impugned Assessment Order dated 12.02.2025 is quashed and the case is remitted back to the 2nd Respondent to pass a fresh order subject to the Petitioner depositing 25% of the disputed tax in cash from the Petitioner's Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order. Petition disposed off by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order issued after issuance of a Show Cause Notice can be set aside and remitted for fresh consideration where the assessee failed to respond to the Show Cause Notice but seeks an opportunity to substantiate its case. 2. Whether the Court should exercise writ jurisdiction to quash an assessment order and direct deposit of a portion of disputed tax as a condition for grant of fresh adjudication. 3. Whether failure to substantiate the case with documents at the time of judicial admission is a standalone ground for dismissal of the writ petition. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether an assessment order issued after a Show Cause Notice can be set aside and remitted for fresh consideration where the assessee failed to respond but seeks an opportunity to substantiate. Legal framework: Administrative law principles governing adjudication and natural justice require that an affected party be given a reasonable opportunity to be heard and to produce evidence in response to a show cause notice before final assessment is confirmed. Precedent Treatment: The Court noted that similar circumstances have been addressed in prior judgments relied upon by the respondents (referenced Supreme Court decisions) which deal with scope of judicial interference in tax adjudication and circumstances in which orders may be quashed for fresh consideration. The Court followed its own consistent prior practice under similar facts. Interpretation and reasoning: The Court observed that the impugned assessment order followed a Show Cause Notice and reminders and that the petitioner had not responded earlier but sought a chance to substantiate the case. Recognizing the value of adjudication on merits and consistency with earlier decisions of the High Court in like cases, the Court concluded that remittal for fresh consideration was appropriate, subject to protective conditions to balance the revenue interest. Ratio vs. Obiter: Ratio - Where an assessment has been confirmed following non-response to a show cause notice, the Court may quash the assessment and remit for fresh adjudication if the assessee seeks to substantiate its case, subject to appropriate conditions. Obiter - Observations regarding the desirability of adjudication on merits in tax matters and the Court's prior practice. Conclusions: The Court quashed the impugned assessment and remitted the matter for fresh consideration, directing the authority to hear the assessee and decide on merits. Issue 2: Whether the Court should condition quashing/remittal on deposit of a portion of the disputed tax and ancillary reliefs (lifting attachment) to protect revenue interests. Legal framework: Writ courts exercise equitable discretion when interfering with executive action in tax matters; conditions (such as part deposit of disputed tax) are permissible to safeguard revenue while enabling adjudication on merits. Precedent Treatment: The Court relied on consistent High Court practice in similar cases to impose conditional deposits; the respondents cited Supreme Court authorities affirming limited scope of judicial interference but the Court adopted an approach balancing the parties' interests. Interpretation and reasoning: The Court balanced the assessee's right to be heard and the revenue's interest by ordering a 25% deposit of the disputed tax from the assessee's electronic cash register within 30 days as a condition precedent to remittal; upon compliance, the Court directed lifting of bank account attachment and mandated fresh adjudication within a specified timeframe. Ratio vs. Obiter: Ratio - Quashing of an assessment order may be made conditional upon deposit of a specified portion of the disputed tax to protect revenue; compliance with such condition entitles the assessee to fresh adjudication and interim relief (e.g., lifting of attachment). Obiter - Specific percentage (25%) and timeline suggestions are pragmatic directions tailored to this case. Conclusions: The Court ordered quashing subject to deposit of 25% of the disputed tax within 30 days, directed the authority to pass fresh orders after hearing the assessee (preferably within three months), and ordered that attachment of bank account stand raised upon compliance. Issue 3: Whether failure to substantiate the case with documents at the time of judicial admission warrants dismissal of the writ petition. Legal framework: Under writ jurisdiction, the Court considers whether the petitioner has placed materials necessary to demonstrate prima facie entitlement to relief; absence of documentary substantiation may weaken the petition but does not automatically foreclose remedial relief if the Court otherwise deems remittal appropriate. Precedent Treatment: Respondents relied on Supreme Court decisions supporting limited judicial interference when adjudicatory processes are intact; the Court acknowledged these authorities but applied its discretionary power consistent with its prior practice. Interpretation and reasoning: The Court noted the respondents' contention that no documents were produced but also accepted the petitioner's request for an opportunity to file a reply and requisite documents. The Court treated the impugned assessment as an addendum to the show cause notice, directing contemporaneous filing of documents within the stipulated period, thereby addressing the material deficiency while allowing adjudication on merits. Ratio vs. Obiter: Ratio - Non-production of documents at admission is not an absolute bar to relief where the Court grants an opportunity to substantiate before fresh adjudication; the Court may require such substantiation as a condition of remittal. Obiter - Observations on the necessity of contemporaneous filing and treating the assessment order as an addendum to the original notice. Conclusions: The Court permitted the petitioner to file a reply and requisite documents within thirty days, treating the assessment as an addendum to the show cause notice, and conditioned further proceedings on such compliance. Ancillary procedural directions and consequences of non-compliance Legal framework and reasoning: The Court exercised conditional relief by specifying the consequences of non-compliance to ensure finality and protect the revenue: failure to deposit the directed amount or to file the reply/documents permits the assessing authority to proceed as if the writ were dismissed in limine and to recover the tax confirmed in the impugned order. Ratio vs. Obiter: Ratio - Conditional remittal must be accompanied by clear consequences for non-compliance, allowing the authority to resume enforcement action. Obiter - Timeframes and preferred timelines for disposal derived from judicial convenience and administrative efficacy. Conclusions: Non-compliance with deposit or filing conditions authorizes the authority to proceed against the assessee in accordance with law and pursue recovery of the confirmed tax; compliance requires the authority to hear and decide afresh within the directed timeframe and to lift interim attachments.