The Hon'ble Madras High Court in Tvl. KCP Infra Ltd. v. State Tax Officer [2024] [W.P. NO. 7088 OF 2024 dated March 18, 2024] quashed the impugned GST assessment order passed against the assessee and directed the assessing officer to issue a fresh order after affording a reasonable opportunity to the assessee, subject to the condition that the assessee remits 10% of the disputed tax amount.
Facts of the Case:
1. In late January and early February 2023, the department conducted an inspection under Section 67 of the Tamil Nadu Goods and Services Tax Act, 2017 at the business premises of the Petitioner, Tvl. KCP Infra Ltd.
2. During the inspection, a sworn statement of Mr. V. Muthukumaran, the Accounts Executive of the Petitioner, was recorded on 30.01.2023.
3. The department pointed out 15 discrepancies during the inspection.
4. The Petitioner submitted a detailed reply on 15.02.2023, addressing each of the 15 discrepancies raised by the department.
5. Regarding Discrepancy No. 11, which pertained to Input Tax Credit (ITC) reversal for non-payment for 180 days, the Petitioner provided an aging report of sundry creditors.
6. For Discrepancy No. 7, the Petitioner stated that the turnover pertaining to Telangana, Andhra Pradesh, and Kerala was included based on the audited financial statements, which was untenable. The Petitioner also submitted a trial balance for the turnover from Tamil Nadu.
7. On 20.09.2023, the department issued an intimation to the Petitioner.
8. The Petitioner replied to the intimation on 27.09.2023 and requested an extension of time.
9. Without granting the requested extension, the department issued a show cause notice to the Petitioner on 29.09.2023.
10. Subsequently, on 27.12.2023, the department passed the impugned assessment order against the Petitioner.
11. The Petitioner filed the present writ petition, challenging the impugned assessment order on the ground of breach of principles of natural justice.
12. During the court proceedings, the Petitioner agreed to remit a sum of Rs. 15,00,000/-, which was computed as 10% of the disputed tax demand under seven of the nine heads of claim.
Issue:
Whether the impugned assessment order passed without affording a reasonable opportunity to the assessee was valid.
Held by the Court:
The Hon'ble Madras High Court in W.P. NO. 7088 OF 2024 held as under :
Held that the impugned assessment order dated 27.12.2023 passed against the Petitioner-assessee is quashed, subject to the condition that the assessee remits a sum of Rs. 15,00,000/- (10% of the disputed tax demand under seven heads) within two weeks from the date of receipt of the court's order.
Held that the Petitioner-assessee is permitted to submit a reply to the show cause notice within the same two-week period.
Observed that upon receipt of the assessee's reply to the show cause notice and upon being satisfied that the aforementioned sum of Rs. 15,00,000/- was remitted, the assessing officer is directed to provide a reasonable opportunity to the assessee, including a personal hearing.
Directed that after affording a reasonable opportunity to the assessee, the assessing officer is to issue a fresh assessment order within two months from the date of receipt of the assessee's reply to the show cause notice.
Instructed that while issuing the fresh assessment order, the assessing officer shall take note of and follow the procedure prescribed in Circular No. 12/2022 dated 26.09.2022 issued by the Commissioner of Commercial Taxes, Chennai.
Observed that although the assessee should have responded to the intimation, show cause notice, and availed the opportunity of personal hearing, the impugned assessment order warranted interference due to the specific facts and circumstances of the case.
Opined that the court's decision was based on upholding the principles of natural justice and the assessee's right to a fair and reasonable opportunity to defend their case before the issuance of an assessment order.Relevant Sections: Section 73 of the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Tax Act, 2017.
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