GST Assessment Set Aside as Order Passed Without Hearing: Madras HC Directs Fresh Order

NNV Enterprises Vs Deputy State Tax Officer-I (Madras High Court)

The writ petition challenged an assessment order dated 31.05.2023, whereby the proposal in the show cause notice (Form GST DRC-01 dated 24.01.2023) for the tax period 2021–22 was confirmed due to non-submission of a reply by the petitioner. The impugned order confirmed tax and penalty demands aggregating to ₹9,43,952, comprising ₹4,71,976 each under SGST and CGST, with no amount initially paid.

It was noted that the entire disputed tax and penalty had subsequently been recovered from the petitioner’s Electronic Liability Ledger on 04.03.2024. Considering that the assessment order was passed ex parte and that the liability had already been recovered, the Court deemed it appropriate to remit the matter to the respondent for fresh adjudication on merits.

The Court directed the petitioner to file a reply to the show cause notice along with supporting documents within 30 days from receipt of the order. The respondent was permitted to verify whether the amount had indeed been recovered from the Electronic Liability Ledger. If it was found that no recovery had been made, the petitioner was required to deposit the entire disputed tax.

Upon compliance by the petitioner, the respondent was directed to pass a fresh order in accordance with law, preferably within three months from the date of receipt of the reply. The Court further ordered that any bank account attachment would stand automatically vacated upon such compliance, provided there were no outstanding dues for other tax periods apart from the amount under the impugned order.

The Court clarified that if the petitioner failed to comply with the stipulated conditions, the respondent would be at liberty to proceed with recovery in accordance with law as if the writ petition had been dismissed at the threshold. It was also directed that due notice must be given to the petitioner before passing any further orders.

Accordingly, the writ petition was disposed of with these directions, and no costs were awarded.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

Mr. TNC Kaushik, learned Additional Government Pleader takes notice for the Respondent.

2. This Writ Petition is being disposed of at the stage of admission itself with the consent of the learned counsel for the Petitioner and the learned Government Advocate for the Respondent.

3. In this Writ Petition, the Petitioner has challenged the impugned Assessment order dated 31.05.2023, whereby the proposal in Show Cause Notice in FORM GST DRC O1 dated 24.01.2023 has been confirmed by the respondent for the tax period 2021-222, in absence of reply to the same.

4. By aforesaid impugned Assessment order, following the demand has been confirmed against the Petitioner towards tax and penalty:-

TAX ABSTRACT

5. It appears that the entire disputed tax and penalty demanded under the impugned order has been recovered from the Petitioner’s Electronic Liability Ledger on 04.03.2024.

6. Since the impugned order has been passed exparte on 31.05.2023 and considering the entire tax liability has been recovered from the Petitioner’s GST & Electronic Liability Ledger on 04.03.2024, the case is remitted back to the Respondent to pass a fresh order on merits subject to the petitioner filing a reply to the Show Cause Notice in Form GST DRC-01 dated 24.01.2023 together with requisite documents to substantiate the defence within a period of thirty (30) days from the date of receipt of a copy of this order.

7. However, the Respondent may independently to ascertain whether indeed the amount has been recovered from the Petitioner’s Electronic Liability Ledger. In case, no amount has been recovered, the Petitioner shall deposit the entire disputed tax.

8. In case the Petitioner complies with the above stipulations, the Respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner if any, shall also stand automatically vacated.

9. It is made clear that bank attachment shall be lifted if the Petitioner not being in arrears of any other amount for any other tax period barring the amount demanded under the impugned Order.

10. In case the Petitioner fails to comply with any of the stipulations, the Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine

11. Needless to state, before passing any such order, the Respondent shall give due notice to the Petitioner.

12. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.