MULTIPLE ADJUDICATION ORDERS

[Mr. M. GOVINDARAJAN]

Assessment

In taxation assessment is self assessment by the assessee himself.  GST is not an exception to this.  If the assessment is not done and the tax is paid by the assessee then the Department enters into this scenario and begins to start for the recovery of tax by assessing the tax liability of the assessee.  The assessments that may be carried out by the Department are-

• Provisional assessment;
• Summary assessment;
• Scrutiny of returns;
• Best judgment assessment;
• Assessment of non filers and unregistered persons.

Adjudication order

The following sections of Central Goods and Services Tax Act, 2017 give powers to the proper officer to assess the tax payable-

• Section 73 – Determination of tax not paid or short paid or erroneously refunded or input tax wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts;
• Section 74 - Determination of tax not paid or short paid or erroneously refunded or input tax wrongly availed or utilized by  reason of  fraud or any willful misstatement or suppression of facts;
• Section 75 – General provisions relating to determination of tax;
• Section 76 – Tax collected but not paid;
• Section 77 – Tax wrongly collected and paid to Central Government or State Government.

The proper officer, before initiating recovery proceedings, shall ascertain the tax payable by the tax payer by determining the tax.  For this purpose a show cause notice shall be issued to the tax payer informing the facts and the proposal to recover the tax with interest and/or penalty by giving the tax payer an opportunity to give his objections/facts to the proper officer within the time stipulated in the notice.

The tax payer shall, on receipt of the notice, give reply to the proper officer within the time stipulated in the notice along with the documents relied on by him.  On receipt of the notice the proper officer shall hear the taxpayer, if he sought for a personal hearing and determine the tax payable by the taxpayer and pass the adjudication order.

If no reply is received from the taxpayer the proper officer shall determine the tax payable from the records available and pass the best judgment order.

Multiple adjudication orders

Whether multiple assessment orders can be passed under the provisions of GST laws for the same period by different Authorities? 

The High Court, Gujarat ruled that multiple adjudication orders cannot be passed in M/S V.S. ENTERPRISES VERSUS STATE OF U.P. AND 2 OTHERS [2021 (7) TMI 1257 - ALLAHABAD HIGH COURT]

In the above said case the respondent No. 2 issued two show cause notices to the petition under section 74 of Uttar Pradesh Goods and Services Tax Act, 2017 on 22.09.2020 for the period from September 2017 to December 2017.  A second notice was also issued by him to the petitioner on 22.12.2020 for the period from July 2017  to March 2018 (which includes the period in the first show cause notice).  On 09.04.2021 another show cause notice was issued by the third respondent for November 2021.

Adjudication orders for all three notices were issued by the respondent No. 2 and 3.  The same has been challenged by the petitioner before the High Court.  Before the High Court the petitioner contended the following-

• Under Uttar Pradesh Goods and Services Tax Act, 2017 only one order of adjudication could have been passed for a tax period.
• Three show cause notices have been issued by the respondents 2 and 3 for overlapping period  which is against the provisions of GST laws.
• Three adjudication orders have been passed simultaneously by the two respondent officers which is also against the provisions of the GST laws.
• The respondents have acted without jurisdiction.
• These orders have been passed without giving the petitioner a reasonable opportunity of being heard.
• In any case no order could have been passed till the date to furnish reply as extended.

The High Court granted time to the Department to file reply to the petition.  The High Court directed the Department not to take coercive action till such time. 

The respondents replied to the petition.  They admitted that the mistakes caused.  They contended that on account of the bona fide mistake committed, three orders came into existence.  However, the respondent No. 2 has jurisdiction to make proper adjudication. 

The High Court observed that undisputedly three periods for which the orders had been passed are overlapping.  The show cause notice dated 22.12.2020 issued by the respondent No. 2 for the period from July 2017 to March 2018 covers the entire period and dispute being sought to be adjudicated in the other two show cause notices.

The High Court further observed that the respondent No. 2 fixed the hearing date on 05.01.2021 for the show cause notice dated 22.12.2020.  The petitioner could not able to attend the said hearing due to COVID 19.  The petitioner brought to the notice of the High Court that considering the difficulties of COVID 19 the Government had itself issued an order dated 01.05.2021 extending the period to submit reply and responses up to 30.05.2021 and extended up to 30.06.2021.  Therefore the petitioner contended that the order passed on 09.06.2021issued by the respondent No. 2 is an ex-parte order without giving a reasonable opportunity to the petitioner to defend the case. 

The High Court quashed the multiple adjudication orders passed by the respondent No. 2 and 3 in three cases.  The High Court remitted the adjudication dated 09.06.2021 covering the period from July 2017 to March 2018 with directions to pass a fresh adjudication order after affording the petitioner a reasonable opportunity of being heard.  The High Court also directed the petitioner to give file his reply to the notice dated 22.12.2020 within one month from the date of order.  The Adjudicating Officer is to conduct the proceedings and conclude the same in accordance with law strictly.