2025 (6) TMI 585 - HC - GST

Levy of taxes - petitioner had failed to respond to the SCN and accordingly an order of attachment was also passed on the same date - impugned order was passed based on a presumption that as the Assesee has not filed reply therefore it is deemed to be an agreement with the SCN - HELD THAT - The material on record leaves no room of doubt in the mind of the Court that though the petitioner filed reply to the show cause notice through online mode on 20.12.2023 under acknowledgment No. ARN ZD18 1223033093T and that even after receipt of such reply the impugned decision was passed based in the premises that the petitioner did not reply to such show cause notice and that assesee agreed to the allegation made in the show cause. Therefore the stand of the respondent in the affidavit to the effect that they have considered the reply of the petitioner to the show cause is not sustainable inasmuch as the respondents by way of filing affidavit cannot change their position from the reason recorded in the impugned order dated 29.12.2023. Accordingly in the given facts of the present case the impugned order dated 29.12.2023 and subsequent attachment order dated 29.12.2023 are set aside and quashed and the matter is relegated to the competent authority i.e. the respondent No. 3 to take a decision afresh on the basis of the reply to the show cause notice dated 20.12.2023 and as per procedure prescribed under the Act in question. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court were:

• Whether the impugned order confirming the levy of taxes and passing an order of attachment could be sustained when it was based on the presumption that the petitioner had not filed any reply to the show cause notice, despite the petitioner having submitted a reply online prior to the order.
• Whether the respondent authority, in passing the impugned order, applied its mind to the reply submitted by the petitioner to the show cause notice as required under the relevant legal framework.
• Whether the contradictory stand taken by the respondent in the affidavit-that the reply was received and considered-could be accepted when the impugned order itself recorded non-receipt of any reply and proceeded on that premise.
• Whether the impugned order and attachment order should be quashed on grounds of procedural impropriety and failure to consider the petitioner's reply.
• Whether the petitioner had an alternative efficacious remedy of appeal, and the consequent impact on the writ petition.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Impugned Order Based on Non-Receipt of Reply

Relevant legal framework and precedents: The procedural law governing tax assessments requires that before confirming any levy, the authority must consider any reply or representation made by the assessee to the show cause notice. The principle of natural justice mandates that the assessee's submissions be duly considered and recorded in the order.

Court's interpretation and reasoning: The Court carefully examined the impugned order dated 29.12.2023 and found that it explicitly recorded that the petitioner had not replied to the show cause notice and thus was deemed to have agreed with the allegations. This presumption formed the sole basis for confirming the tax levy and passing the attachment order.

Key evidence and findings: The petitioner produced acknowledgment of submission of the reply to the show cause notice online on 20.12.2023 (ARN ZD18 1223033093T). The respondent's affidavit stated that the reply was received and considered, but the impugned order did not reflect any such consideration or application of mind.

Application of law to facts: The Court emphasized that the impugned order must stand on its own reasoning. The contradictory affidavit could not cure the procedural defect of the order failing to record or consider the reply. The Court held that the order was passed on an incorrect premise and was thus unsustainable.

Treatment of competing arguments: The respondent argued that the writ petition should be dismissed as the petitioner had an alternative remedy of appeal and that the reply was considered. The Court rejected the latter argument due to the inconsistency between the affidavit and the order. The availability of an alternative remedy was noted but did not preclude judicial scrutiny of the procedural impropriety.

Conclusions: The impugned order was quashed because it was based on a mistaken presumption that the petitioner had not replied, thereby violating principles of natural justice and statutory procedure.

Issue 2: Contradiction Between Impugned Order and Respondent's Affidavit

Relevant legal framework and precedents: It is a settled principle that the reasons recorded in an administrative or quasi-judicial order cannot be contradicted or supplemented by subsequent affidavits or statements. The order itself must disclose the basis of the decision.

Court's interpretation and reasoning: The Court found that the respondent's affidavit claiming receipt and consideration of the reply was inconsistent with the impugned order's express finding of non-receipt. Both positions could not be simultaneously accepted.

Key evidence and findings: The impugned order's text, "The tax payer has not replied or contested the notice, deemed agreed with the terms of the notice," was decisive. The affidavit's contrary claim was insufficient to validate the order.

Application of law to facts: The Court reiterated that the validity of the order depends on the reasons recorded therein. The respondent could not, by affidavit, alter the factual basis of the order after the fact.

Treatment of competing arguments: The Court rejected the respondent's attempt to rely on the affidavit to justify the order, emphasizing the primacy of the order's contents.

Conclusions: The contradictory stand taken by the respondent was held to be unsustainable, leading to the setting aside of the impugned order.

Issue 3: Quashing of the Impugned Order and Attachment Order

Relevant legal framework and precedents: Where an order is passed without considering the reply or representation of the affected party, it is liable to be quashed for violation of principles of natural justice and statutory procedure.

Court's interpretation and reasoning: Given the procedural lapse, the Court found it appropriate to set aside the impugned order and the consequential attachment order.

Key evidence and findings: The petitioner's reply submission and acknowledgment, the impugned order's failure to consider the reply, and the contradictory affidavit were critical.

Application of law to facts: The Court ordered the matter to be remitted to the competent authority for fresh consideration of the reply in accordance with the prescribed procedure under the relevant Act.

Treatment of competing arguments: The Court did not find merit in the respondent's contention that the writ petition should be dismissed on account of an alternative remedy and instead emphasized the necessity of procedural compliance.

Conclusions: The impugned order and attachment order were quashed, and the matter was remanded for fresh decision.

3. SIGNIFICANT HOLDINGS

"The tax payer has not replied or contested the notice, deemed agreed with the terms of the notice."

The Court held that an order passed on the erroneous premise that the assessee has not replied to the show cause notice, when in fact the reply was submitted and acknowledged, is not sustainable. The contradictory affidavit filed by the respondent cannot cure the defect in the impugned order which fails to record any consideration of the reply.

Core principles established include:

• Requirement of recording and applying mind to the reply to a show cause notice before confirming any levy or passing consequential orders.
• An administrative or quasi-jud