The Hon'ble High Court of Madras in Tvl. Zulaikha Motors (P.) Ltd. v. Assistant Commissioner (ST) W.P. NO. 22045 OF 2024 dated August 13, 2024, held that an assessment order passed without proper notice and opportunity to be heard violates principles of natural justice. The Court set aside the impugned assessment order and remanded the matter for fresh consideration, subject to the assessee depositing Rs. 1.5 crore within 4 weeks.
Facts of the Case:
The petitioner, Tvl. Zulaikha Motors (P.) Ltd., filed a Writ Petition seeking to quash the Assessment Order dated April 6, 2024, bearing GSTIN No.33AAACZ4106B1ZZ/2018-2019 issued by the respondent, the Assistant Commissioner (ST).
The respondent had issued a DRC-01A Intimation of discrepancy on October 17, 2023, under Section 73(5) of the GST Act, followed by a show cause notice in Form GST DRC-01 dated November 8, 2023. The petitioner claimed it was unaware of these GST proceedings as all correspondences were sent only through the GST portal and uploaded under the "Additional Notices and Orders" column. Consequently, the petitioner's Chartered Accountant, who was monitoring the portal, failed to notice these communications.
The impugned Assessment Order for the year 2018-2019 was passed on April 6, 2024, alleging a shortfall in tax paid along with interest and penalty. The petitioner argued that the respondent failed to appreciate the Reconciliation Statement filed under GSTR-9C and the payment of tax/ITC credit utilized. The petitioner contended that the respondent, without verifying the actual utilization of ITC claims, issued a notice for a difference of Rs. 10,55,82,408/-, and without explanation, concluded a demand of Rs. 28,12,33,800/-.
The respondent, through the Additional Government Pleader, submitted that the impugned order may be set aside subject to the petitioner paying Rs. 1,50,00,000/-
Held:
The Hon'ble High Court of Madras in W.P. No. 22045 of 2024 held that:
The Court observed that all notices were uploaded in the portal under the Additional Notices Column, and therefore, the petitioner had no occasion to view the said column. This led to the petitioner being unaware of the ongoing proceedings against it. The Court held that this method of communication was inadequate and did not provide the petitioner with a fair opportunity to present its case.
The Court opined that the impugned order was passed without affording an opportunity to the petitioner to establish its case before the authorities concerned. This, the Court held, was a clear violation of the principles of natural justice, which require that a party be given a fair hearing before an adverse decision is made against them.
Considering these facts, the Court decided to set aside the impugned Assessment Order dated April 6, 2024, bearing GSTIN No.33AAACZ4106B1ZZ/2018-2019. However, balancing the interests of both parties, the Court directed the petitioner to deposit a sum of Rs. 1,50,00,000/- (Rupees One Crore and Fifty Lakhs Only) within a period of four weeks from the date of receipt of a copy of this order.
The Court further laid out a procedure for fresh consideration of the matter. It directed that upon receipt of the said deposit, the authorities concerned should pass orders lifting the attachment order issued against the supplier of the petitioner. The petitioner was then given two weeks to file a reply. Following this, the Court instructed the authorities to fix a date for personal hearing by sending a physical notice to the petitioner providing 14 days' time, and thereafter pass orders on merits and in accordance with law.
In essence, the Court's decision aimed to rectify the procedural lapses while ensuring that the tax authorities' concerns were not entirely dismissed. By setting aside the order and mandating a fresh hearing with proper notice, the Court upheld the principles of natural justice while also safeguarding the potential revenue interests by requiring a substantial deposit.
Relevant Sections:
Section 73 of Central Goods and Services Tax Act, 2017/Tamil Nadu Goods and Services Tax Act, 2017
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