2024 (3) TMI 1267 - HC - GST

Validity of assessment order - breach of principles of natural justice - failure to reply to the show cause notice and participating in assessment proceedings - HELD THAT - The petitioner responded to each of the 15 discrepancies noticed during inspection. In particular the petitioner responded to discrepancy 11 by providing an ageing report in respect of sundry creditors. In response to discrepancy 7 the petitioner stated that revenues from Telangana Andhra Pradesh and Kerala had been included on the basis of the audited financial statement and that such inclusion is untenable. A trial balance was also submitted. Although the petitioner should have responded to the intimation and show cause notice and availed of the opportunity of personal hearing in the above facts and circumstances the impugned assessment order calls for interference albeit by putting the petitioner on terms. The impugned assessment order is quashed subject to the condition that the petitioner remits a sum of Rs. 15, 00, 000/- as agreed to towards the disputed tax demand within a maximum period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Subject to the receipt thereof and upon being satisfied that the above mentioned sum of Rs. 15, 00, 000/- was received the assessing officer is directed to provide a reasonable opportunity to the petitioner including a personal hearing and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner s reply. Petition disposed off.

Summary

Issues Involved:
The judgment addresses the breach of principles of natural justice in an assessment order under Section 67 of the Tamil Nadu Goods and Services Tax Act 2017.

Assessment Proceedings:
The petitioner challenged an assessment order dated 27.12.2023, citing a breach of natural justice principles. The inspection conducted earlier revealed 15 discrepancies, to which the petitioner responded. However, despite requesting an extension, a show cause notice was issued on 29.09.2023, followed by the impugned assessment order.

Contentions and Submissions:
The petitioner's counsel argued that all discrepancies, including Input Tax Credit (ITC) reversal and turnover from specific regions, were addressed in the petitioner's replies during the inspection. The petitioner claimed entitlement to ITC for delayed payments subject to interest. It was highlighted that the petitioner's responses were disregarded in subsequent stages, leading to the inclusion of certain turnovers in the assessment order against the petitioner's requests.

Resolution and Order:
The petitioner agreed to remit Rs. 15,00,000/-, attributing 10% of the disputed tax demand under seven heads. The Additional Government Pleader contended that the petitioner had sufficient opportunities to contest the tax demand, including multiple personal hearing offers. The Court noted that although the petitioner responded to discrepancies during inspection, failure to engage in subsequent stages warranted interference in the assessment order, subject to the petitioner's compliance with the remittance condition.

Final Decision:
The Court quashed the assessment order, subject to the petitioner remitting Rs. 15,00,000/- within two weeks and submitting a reply to the show cause notice within the same period. Upon receipt of the remittance and reply, the assessing officer was directed to provide a reasonable opportunity for a personal hearing and issue a fresh assessment order within two months. The assessing officer was instructed to follow the procedure outlined in Circular No.12/2022 dated 26.09.2022. The writ petition was disposed of with no costs awarded, and connected miscellaneous petitions were closed.