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The Hon’ble Madras High Court in the case of Rainbow Stones (P.) Ltd. v. Assistant Commissioner (ST) [W.P. No. 4510 of 2024 dated February 26, 2024] allowed the writ petition, thereby setting aside the Assessment Order on the ground that the order is vague in nature and devoid of proper reasoning.

Facts:

Rainbow Stones (P.) Ltd. has filed a writ petition challenging the assessment order dated December 31, 2023 (“the Impugned Order”) based on the difference between the Input Tax Credit (“ITC”) claimed in GSTR-3B and reflected under GSTR-2A. The Petitioner contended that the Impugned order passed by the Revenue Department (“the Respondent”) is vague in nature as the only observation recorded in the Impugned Order is that the reply filed by the Petitioner is not acceptable.

Assessment Order not sustainable when vague in nature Madras HC

Held:

The Hon’ble Madras High Court in the case of W.P. No. 4510 of 2024 set aside the Impugned Order as the Respondent Assessing Officer on the ground that, the Impugned Order is vague in nature, based on which the demand of tax, interest and penalty was confirmed. The Hon’ble High Court directed that matter be remanded back for reconsideration and passing of fresh order after granting reasonable opportunity of hearing to the Petitioner.

Conclusion: The judgment rendered by the Madras High Court in Rainbow Stones (P.) Ltd. v. Assistant Commissioner (ST) underscores the significance of clarity and reasoning in assessment proceedings. Vague and unsubstantiated orders not only infringe upon the rights of taxpayers but also undermine the integrity of the tax administration system.

This ruling serves as a reminder to assessing authorities to adhere to principles of natural justice and provide comprehensive reasoning while passing orders. It also highlights the pivotal role of the judiciary in safeguarding the interests of taxpayers against arbitrary administrative actions.

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(Author can be reached at info@a2ztaxcorp.com)

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