2025 (10) TMI 373 - HC - GST

Impugned assessment quashed; matter remitted for fresh de novo GST assessment on deposit of 25% from ECR within 30 days

HC quashed the impugned Assessment Order dated 25.04.2024 and remitted the matter to the Respondent for fresh de novo assessment, subject to the ... Time limitation - Petitioner has approached this Court long after the expiry of the limitation period prescribed both for filing an appeal and to rectify the same - HELD THAT:- Having considered the consistent view taken by this Court in similar circumstances, this Court is inclined to come to the partial rescue of the Petitioner by quashing the impugned Assessment Order dated 25.04.2024 and remitting the case back to the Respondent to pass a fresh order de novo 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. The Petitioner shall file a reply contemporaneously to the Show Cause Notice in GST DRC-01 dated 28.12.2023 together with requisite documents to substantiate the case by treating the impugned Assessment Order dated 25.04.2024 as an addendum to the Show Cause Notice dated 28.12.2023 within a period of thirty days from the date of receipt of a copy of this order - In case the Petitioner fails to comply with any of the conditions stipulated above, the Respondent is at liberty to proceed against the Petitioner in accordance with law as if this Writ Petition was dismissed in limine today. Thereafter, it is for the Respondent to take steps against the Petitioner to recover the tax that has been confirmed in the impugned Assessment Order. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the Writ Petition challenging an assessment order issued after service of a show cause notice is maintainable where the petitioner failed to file a reply to the show cause notice and the statutory limitation for appellate or rectification remedies has expired. 2. Whether the Court can quash an assessment order and remit the matter for fresh adjudication de novo on terms (including deposit of a portion of the disputed tax) where the assessee did not participate in the original assessment proceedings. 3. The scope and conditions of remittal for de novo assessment by the tax authority: what procedures, timelines, burdens and consequences must be imposed on the taxpayer and the authority. 4. Whether fresh assessment proceedings should be influenced by prior observations that preceded the show cause notice and the impugned assessment order. 5. Consequences of non-compliance with court-imposed terms for remittal (including deposit and filing of reply) and the authority's power to proceed thereafter. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability: Limitation and Non-Participation Legal framework: Remedies against an assessment order ordinarily lie under the statutory appellate and revisionary/rectification provisions within prescribed limitation periods; writ jurisdiction is discretionary and is exercised sparingly where statutory remedies are available. Precedent treatment: The Court noted that relevant apex court decisions have emphasised availability and primacy of statutory remedies and the limits on writ intervention when limitation has expired and when the assessee did not participate in proceedings. Interpretation and reasoning: The Court observed that the petitioner approached long after expiry of limitation for appeal and rectification and had not filed any reply to the show cause notice, resulting in confirmation of demand. Those facts weigh against granting relief on conventional grounds. However, the Court recognised that prior High Court practice under similar facts has occasionally exercised discretionary writ jurisdiction to afford limited relief subject to conditions. Ratio vs. Obiter: The observation that statutory remedies and limitation normally bar writ relief is ratio insofar as it applies established principles of exhaustion of statutory remedies and limits on writ jurisdiction; the Court's decision to nonetheless grant conditional relief in view of consistent High Court practice is an application of discretion and forms the operative ratio of this judgment. Conclusion: Although the petition was filed beyond statutory limitation and the petitioner did not participate in assessment proceedings, the Court retained and exercised discretionary writ jurisdiction to grant conditional relief consistent with its prior practice. Issue 2 - Power to Quash and Remit on Terms (Deposit Condition) Legal framework: A writ court may quash an order and remit the matter for fresh consideration when there is jurisdictional infirmity, breach of principles of natural justice, or other substantial injustice; the court may attach terms (including deposit) to balance public revenue protection and equitable relief to the taxpayer. Precedent treatment: While apex authority emphasises restraint where statutory remedies exist, High Court practice has permitted quashing with remand on terms, notably requiring deposits of a portion of disputed tax as a precondition for relief. Interpretation and reasoning: The Court held that, despite non-participation and limitation, equitable considerations and consistent High Court precedents justify remittal on terms. Requiring deposit of 25% of disputed tax from the petitioner's electronic cash ledger within 30 days was treated as a proportionate protective measure for revenue while allowing the taxpayer a chance to be heard. Ratio vs. Obiter: The imposition of a 25% deposit as a condition for quashing and remittal in the present facts is ratio for similar cases before this Court; the precise percentage and modalities are pragmatic terms rather than new legal principle and may be regarded as discretionary practice-bound ratio for the regional jurisdiction. Conclusion: The Court affirmed its power to quash the assessment order and remit for fresh adjudication subject to a deposit condition to protect revenue and enable adjudication on merits. Issue 3 - Procedural Obligations on Remittal: Filing Reply, Production of Documents, and Timelines Legal framework: Remittal for de novo adjudication requires that the taxpayer be given an opportunity to be heard; the authority must consider fresh submissions and material in accordance with law within a reasonable time. Precedent treatment: The Court relied on its consistent practice to require prompt filing of replies and documentary substantiation when relief is granted, and to set timelines for the authority to decide thereafter. Interpretation and reasoning: The Court ordered the petitioner to file a reply contemporaneously to the original show cause notice and to produce requisite documents within 30 days of receipt of the order, treating the impugned assessment as an addendum to the show cause notice. The authority was directed to pass a fresh order de novo preferably within three months thereafter. These directions were intended to ensure expeditious resolution and to prevent re-litigation delay. Ratio vs. Obiter: Directing filing of reply and documentary substantiation and setting specific timelines for the authority is ratio in the context of conditional remittal; the insistence on contemporaneous compliance and the three-month target are practical procedural terms of the order. Conclusion: The remittal is conditional on the petitioner filing a reply and producing documents within a fixed short period; the authority must adjudicate de novo expeditiously thereafter. Issue 4 - Prohibition on Reliance by Authority on Prior Observations Legal framework: Fresh assessment de novo requires adjudication on present materials; prejudicial past observations that preceded the show cause notice should not influence fresh consideration unless independently justified. Precedent treatment: The Court reiterated that de novo proceedings must be uninfluenced by prior observations that preceded the show cause notice, aligning with principles of impartial fresh adjudication. Interpretation and reasoning: The Court expressly ordered that the fresh assessment should be made without being influenced by any observations which preceded the show cause notice, thereby preserving the integrity of de novo consideration and ensuring no pre-judgment taints the proceedings. Ratio vs. Obiter: This direction constitutes ratio, as it governs the manner of fresh adjudication on remittal and safeguards fairness in administrative proceedings. Conclusion: The authority must conduct de novo assessment unimpaired by prior observations; existing prior remarks must not dictate the fresh outcome. Issue 5 - Consequences of Non-Compliance with Court-Imposed Conditions and Further Proceedings Legal framework: When conditional relief is granted, failure to comply with terms permits the authority to proceed as if the writ had been dismissed; recovery and enforcement actions may follow in accordance with law after due notice. Precedent treatment: The Court followed prevailing procedural practice that non-compliance disentitles the petitioner from the conditional benefit and restores the authority's full power to act. Interpretation and reasoning: The Court made clear that if the petitioner fails to deposit the specified amount or to file the reply and documents within the stipulated period, the respondent is at liberty to proceed in accordance with law as if the petition were dismissed in limine; subsequent recovery steps may be taken after giving due notice. The Court also mandated petitioner cooperation in de novo proceedings. Ratio vs. Obiter: The consequences articulated are ratio regarding enforcement of court-imposed conditions and the authority's consequent powers to resume statutory proceedings. Conclusion: Non-compliance with deposit or filing obligations will terminate the special relief; the authority may resume statutory proceedings and recovery after giving due notice. Miscellaneous Procedural Directions The Court required due notice to the petitioner before any adverse order is passed during de novo proceedings and emphasized petitioner's obligation to cooperate. No costs were awarded. These directions are procedural adjuncts to the remittal and form part of the operative order rather than obiter commentary.