GST Assessment Order is void when Notice is not served: Madras High Court

Tvl. Diamond Shipping Agencies Private Limited Vs Assistant Commissioner (ST) (Madras High Court)

In a significant legal development, the Madras High Court (Madurai Bench) has issued a ruling that underscores the importance of adhering to procedural requirements in the realm of GST assessments. The court held in the case of M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. v. Assistant Commissioner, Tuticorin [W.P. (MD) 6874 of 2023 dated August 29, 2023] that an assessment order cannot be valid if it is passed without serving proper notice, as mandated by Section 169(1)(b) of theCentral Goods and Services Tax Act, 2017 (CGST Act).

Facts:

M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. (“the Petitioner”) operates three business verticals on the same PAN. The Revenue Department (“the Respondent”) passed the order dated August 17, 2022, (“the Impugned Order”) of the CGST Act raising demand against the Petitioner vide GST DRC-07 dated August 17, 2022.

Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble Madras High Court (Madurai Bench) for setting aside the Impugned Order and directing the Respondent to re-do the assessment. It was submitted that the Impugned Order was passed without considering the Annual Returns in GSTR-9 and the Audit Statement filed in GSTR-9C. No opportunity has been granted to the Petitioner to submit the required documents. It was further submitted that, no physical notice/order was served under Section 169(1)(b) of the CGST Act, and no opportunity was granted to the Petitioner to appear before the Respondent, therefore the Impugned Order passed, violates the principle of natural justice.

Issue:

Whether the assessment order could be passed without serving notice as per conditions stipulated in Section 169(1)(b) of the CGST Act?

Held:

The Hon’ble Madras High Court (Madras Bench) in W.P. (MD) 6874 of 2023 held as under:

• Opined that, the Impugned Order is passed without serving notice under Section 169(1)(b) of the CGST Act and without considering the fact that the Petitioner has three business verticals.
• Held that, the Impugned Order is quashed, hence Writ Petition is allowed.
• Directed that, the Respondent shall grant opportunity for personal hearing to the Petitioner and Petitioner shall produce the evidence and required documents. Thereafter, the Respondent officers shall pass the required orders.
• Further Directed that, the Respondent shall complete the assessment proceedings within eight weeks from the date of receipt of the order of the Court.

Conclusion:

The Madras High Court’s ruling emphasizes the importance of adhering to procedural requirements and principles of natural justice in GST assessment cases. The court’s decision underscores that an assessment order is void if it is issued without serving the necessary notice, as mandated by the CGST Act. This judgment highlights the significance of procedural fairness in the context of tax assessments and ensures that taxpayers are granted a reasonable opportunity to present their case and provide supporting documentation.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ Petition is filed to quash the impugned order dated 17.08.2022 for the assessment year 2017-2018.

2. The contention of the petitioner is that assessment order is passed by violative the principles of natural justice and consequently direct the respondent to re-do the assessment. The petitioner is having three business verticals of the same PAN, but the respondents have passed order without considering the annual returns in GSTR-9 and Auditor’s statement filed in GSTR-9C for the said three business verticals. Therefore, the petitioner claims that if an opportunity is granted, he would explain the same to the authorities. Since the same is not granted, the petitioner is before this Court. Moreover, the respondent without serving physical notice / order the impugned order is passed which is against the Section 169(1)(b) of the Act.

3. This Court is of the considered opinion that the impugned order is passed without serving notice as per section 169(1)(b) and without taking into account that the petitioner is having three business verticals. Therefore, this Court is inclined to quash the impugned order. Hence, the impugned order is quashed. The respondent is directed to grant opportunity to the petitioner, preferably grant personal hearing and thereafter pass orders. The petitioner shall produce all the evidences and documents before the respondent. The respondent is directed to complete the assessment proceedings within a period of eight (8) weeks from the date of receipt of a copy of this order.

4. In view of the above, this Writ Petition is allowed. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.

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