2025 (7) TMI 390 - HC - GST

Challenge to impugned assessment order and the impugned rejection order passed by the respondent - reply filed by the petitioner was not at all considered by the respondent - principles of natural justice - petitioner is willing to pay 10% of the disputed tax amount to the respondent - HELD THAT - In this case it is clear that the reply was sent by the petitioner vide email instead of uploading the same in the portal and hence the said reply was not considered by the Assessing Officer while passing the impugned assessment order. Aggrieved over the same a rectification application was filed by the petitioner and the same was also dismissed vide the rejection order. Further it appears that the impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner which is a clear violation of principles of natural justice and hence the said assessment order is liable to be set aside. However as contended by the learned Senior Standing counsel the said aspect cannot be considered in a rectification application since a rectification application will be entertained only if there is any error apparent on the original order. It was submitted by the learned counsel for the petitioner that the petitioner is willing to pay 10% of the disputed tax amount to the respondent. In such view of the matter this Court is inclined to set aside the impugned order dated 17.02.2025 passed by the respondent - the impugned assessment order dated 17.02.2025 are hereby set aside and the matter is remanded back to the Assessing Officer for reconsideration and to pass fresh assessment order - petition allowed by way of remnd.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter include:

• Whether the assessment order passed by the respondent without considering the petitioner's reply, which was submitted via email instead of the prescribed portal, is valid.
• Whether the rejection of the rectification application on the ground that it did not disclose any error apparent on the face of the original order was justified.
• Whether the failure to provide the petitioner with an opportunity of personal hearing before passing the impugned assessment order violates the principles of natural justice.
• Whether the matter should be remanded for fresh consideration, given the procedural lapses and the petitioner's willingness to pay a portion of the disputed tax amount.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the assessment order passed without considering the petitioner's reply submitted via email

Relevant legal framework and precedents: The procedural rules governing assessment typically require that replies or representations to show cause notices be filed through prescribed channels, such as an online portal, to ensure proper record-keeping and consideration. However, courts have recognized that procedural technicalities should not override substantive rights, especially when a party has attempted to communicate its response.

Court's interpretation and reasoning: The Court observed that the petitioner had indeed submitted a reply, albeit through email rather than the mandated portal. The respondent did not consider this reply while passing the assessment order, effectively treating it as if no reply was filed. The Court found this approach to be flawed, as it ignored the petitioner's substantive response.

Key evidence and findings: The petitioner's email reply was undisputedly sent before the assessment order was passed. The respondent's failure to consider it was admitted by the learned Senior Standing counsel.

Application of law to facts: The Court held that ignoring the petitioner's reply submitted by email amounted to a denial of an opportunity to be heard, a fundamental procedural right. The procedural non-compliance in mode of submission did not justify non-consideration of the reply.

Treatment of competing arguments: The respondent contended that the reply was not filed through the portal as required, and hence was not considered. The Court balanced this procedural requirement against the petitioner's substantive right to be heard and found in favour of the latter.

Conclusion: The assessment order passed without considering the petitioner's reply was invalid.

Issue 2: Justification for rejection of rectification application on the ground of absence of error apparent on the face of the order

Relevant legal framework and precedents: Rectification applications are governed by the principle that they can only be entertained where there is an error apparent on the face of the record. Errors of fact or procedural lapses not amounting to such errors are generally not grounds for rectification.

Court's interpretation and reasoning: The Court noted that the rejection of the rectification application was based on the absence of any error apparent on the face of the original assessment order. The respondent was correct in stating that procedural irregularities, such as failure to consider a reply submitted by email or lack of personal hearing, do not constitute errors apparent on the face of the record for the purpose of rectification.

Key evidence and findings: The rejection order explicitly stated the basis for refusal was the lack of error apparent on the face of the order.

Application of law to facts: The Court agreed that the rectification route was not the appropriate remedy to challenge the procedural lapses in the original order.

Treatment of competing arguments: The petitioner argued for rectification on the basis that the reply was not considered and no hearing was afforded. The Court distinguished these procedural issues from the narrow scope of rectification.

Conclusion: The rejection of the rectification application was legally sound.

Issue 3: Violation of principles of natural justice due to absence of personal hearing

Relevant legal framework and precedents: The principles of natural justice mandate that a party affected by an adverse order must be given a reasonable opportunity to be heard, including the right to a personal hearing where applicable.

Court's interpretation and reasoning: The Court found that the impugned assessment order was passed without providing the petitioner any opportunity of personal hearing. This was a clear violation of natural justice principles.

Key evidence and findings: The Senior Standing counsel admitted the absence of personal hearing prior to the order.

Application of law to facts: The absence of personal hearing rendered the assessment order procedurally infirm and liable to be set aside.

Treatment of competing arguments: The respondent did not dispute the lack of hearing but contended that the matter could not be remedied by rectification. The Court agreed but emphasized the need for fresh assessment with opportunity for hearing.

Conclusion: The assessment order violated natural justice and must be set aside.

Issue 4: Remand for fresh consideration and petitioner's offer to pay part of disputed tax

Relevant legal framework and precedents: Courts have the discretion to remit matters for fresh consideration where procedural irregularities have occurred, ensuring that parties are afforded fair opportunity to present their case. Offers to pay disputed amounts often weigh in favour of remand rather than dismissal.

Court's interpretation and reasoning: Considering the petitioner's willingness to pay 10% of the disputed tax amount, the Court was inclined to set aside the impugned assessment order and remit the matter for fresh consideration.

Key evidence and findings: The petitioner's counsel explicitly stated the willingness to pay 10% of the disputed tax as a condition for remand.

Application of law to facts: The Court directed that the petitioner file the reply properly (physically or via portal) within three weeks, and that the Assessing Officer provide a 14-day notice for personal hearing before passing a fresh order.

Treatment of competing arguments: The respondent agreed to remand subject to payment and procedural compliance.

Conclusion: The matter was remanded with directions to ensure procedural fairness and opportunity to the petitioner.

3. SIGNIFICANT HOLDINGS

The Court held:

"The impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner, which is a clear violation of principles of natural justice and hence, the said assessment order is liable to be set aside."

"A rectification application will be entertained only if there is any error apparent on the original order."

"The reply was sent by the petitioner, vide email, instead of uploading the same in the portal and hence, the said reply was not considered by the Assessing Officer while passing the impugned assessment order."

Core principles established include:

• Procedural compliance requirements cannot override the fundamental right to be heard; substantive replies must be considered even if submitted through non-prescribed channels, provided