GST DRC-01 show-cause notice assessments passed without taxpayer participation set aside; fresh adjudication ordered with ?1.25 crore deposit.
Assessment orders were challenged as violative of natural justice because they were passed without the assessee's effective participation, despite GST DRC-01 show cause notices having been issued for the relevant tax periods, as the assessee claimed unawareness of the impugned orders and therefore could not respond or be heard. Relying on prior HC practice in similar circumstances, the court held that such orders should be set aside and the matter remitted for fresh adjudication on merits, subject to a protective pre-deposit calibrated to delay and quantum. The impugned orders were quashed and the matters remitted, conditional on the assessee depositing Rs.1,25,00,000 within 30 days.
1. ISSUES PRESENTED AND CONSIDERED
(i) Whether the impugned GST assessment orders, passed after issuance of DRC-01 show cause notices but without a reply from the petitioner, should be quashed and the matters remitted for de novo consideration on the ground that the petitioner did not participate in the proceedings.
(ii) If remand is warranted, what conditions (including quantum and timeline of pre-deposit and filing of replies) should be imposed to balance adjudication on merits with protection of revenue, and what should be the consequence for existing bank account attachment.
2. ISSUE-WISE DETAILED ANALYSIS
Issue (i): Quashing of assessments and remand for fresh adjudication
Legal framework (as discussed): The Court proceeded on the basis that the impugned orders were preceded by GST DRC-01 show cause notices for the relevant tax periods, and that an assessee is expected to reply and participate; however, in similar situations, the Court has quashed such orders and remitted matters for fresh orders, subject to conditions.
Interpretation and reasoning: The Court noted that the petitioner failed to reply to the DRC-01 notices and consequently suffered assessment orders. The petitioner's explanation was that it was unaware of the impugned orders and therefore did not participate in the assessment proceedings. The Court accepted that, in comparable circumstances, remand has been granted on terms, and found no reason to take a different view here. The Court also took into account that the petitioner expressed willingness to abide by the approach earlier adopted by the Court in a similar matter involving remand upon a specified pre-deposit.
Conclusion: The Court quashed the impugned assessment orders and remitted the matters to the concerned respondent for passing fresh orders on merits and in accordance with law, subject to compliance with remand conditions.
Issue (ii): Conditions for remand, timelines, and effect on bank attachment
Legal framework (as discussed): The Court referred to its practice in similar cases of imposing conditional remand, with pre-deposit ranging from 50% to 100% of disputed tax depending on delay, and also noted an instance where remand was ordered subject to 25% deposit. The Court applied this conditional-remand approach as part of its reasoning.
Interpretation and reasoning: While observing that normally a 50% deposit might be directed because the impugned orders were of 2024, the Court moderated the condition considering the amounts involved, and fixed a lump-sum pre-deposit. The Court further structured the remand by requiring the petitioner to file replies to the DRC-01 show cause notices, with documents, and directed that the impugned orders be treated as an addendum to the show cause notices for the purpose of reply. To ensure expeditious disposal, the Court set a preferred outer time for the fresh adjudication after compliance. The Court also linked the lifting of bank account attachment to compliance: it would stand automatically vacated upon compliance, but specifically clarified that lifting would be subject both to the ordered deposit and to there being no other arrears apart from the impugned demands.
Conclusions: (a) Remand was made conditional upon the petitioner depositing Rs. 1,25,00,000/- towards the confirmed tax liability within 30 days from receipt of the order and filing replies to the DRC-01 notices for the respective periods within the same time, with supporting documents. (b) Upon such compliance, the respondent must pass a final order on merits preferably within three months. (c) Subject to compliance and absence of other arrears, bank attachment would be lifted/stand automatically vacated. (d) If the petitioner fails to comply with any stipulation, the respondent may proceed to recover tax in accordance with law as if the writ petitions were dismissed in limine, after giving due notice.