Assessment Order not sustainable when no reasonable opportunity is granted for proper representation and filing of reply

Introduction: In a significant judgment, the Madras High Court, in the case of Tvl. Shanthi Vijay Granites v. Assistant Commissioner (ST), Hosur [W.P. No. 615 of 2021 dated October 31, 2023], addressed the pivotal question of the sustainability of an Assessment Order when the Assessee is denied reasonable opportunity for representation.

Madras High Court disposed of the writ petition, and set aside the Assessment Order on the ground that adequate opportunity for representation and filing of reply was not granted to the Assessee by the Revenue Department. This article examines the facts, issues, and the court’s holding in this crucial matter.

Facts:

Tvl. Shanthi Vijay Granites (“the Petitioner”) filed a writ petition challenging the order dated March 19, 2020, issued by the Revenue Department (“the Respondent”) within two days of issuance of Form GST DRC-01. Also, the assessment order in Form ASMT-07 was issued on the same day of issuance of Form GST DRC-01. The Petitioner contended that no adequate opportunity has been provided to the Petitioner for responding to the Notices issued.

Issue:

Whether Assessment Order is sustainable when no reasonable opportunity is granted for proper representation and filing of reply?

Held:

The Hon’ble Madras High Court in W.P. No. 615 of 2021 held as under:

  • Observed that, there is no restriction on exercising power under Article 226 of the Constitution of India, even if alternate remedy exists, in cases where there is violation of principles of natural justice or lack of jurisdiction or error apparent on the face of record.
  • Noted that, the Form GST DRC-01 is not supported by the Annexure to Show Cause Notice (“the SCN”), therefore, the Petitioner was not provided with the necessary particulars to respond. Also, the Assessment Order in Form ASMT-07 and the SCN were issued on the same day.

Legal principle in tax law A courtroom scene with a large, prominent document labeled 'Assessment Order' on a desk

  • Opined that, the Impugned Order was issued without any opportunity.
  • Further Opined that, when Impugned Order is issued within forty-eight hours of issuance of the SCN, the opportunity to respond was merely illusory, therefore, the proceedings are vitiated, thus, the writ petition is disposed of.
  • Held that, the Impugned Order is set aside.
  • Clarified that, the Respondent is entitled to do re-assessment subject to the condition that the Petitioner is granted reasonable opportunity in accordance with law.

Conclusion: The Madras High Court, in W.P. No. 615 of 2021, set aside the Assessment Order, highlighting the fundamental flaw of inadequate opportunity. The judgment establishes the court’s commitment to principles of natural justice and fair procedure. While allowing the possibility of re-assessment, the court mandates that it should be conducted with a reasonable opportunity for the petitioner in accordance with the law. This case serves as a precedent emphasizing the significance of granting proper representation to the Assessee in tax proceedings.

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

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