Case Law Details
Rajaa Offset Vs State Tax Officer (FAC) (Madras High Court)
Challenge to Assessment Order
The writ petition challenged the assessment order dated 24.05.2024 passed by the respondent. By consent of both parties, the Madras High Court took up the main writ petition for disposal at the admission stage.
Petitioner’s Contention
The petitioner submitted that the show cause notice in Form DRC-01 dated 27.12.2023 had been issued under Section 73 of the GST Act, 2017, whereas the impugned assessment order was passed under Section 74 of the Act. It was argued that if the respondent intended to proceed under Section 74, a notice under that provision was mandatory and had to satisfy the statutory requirements relating to fraud, wilful misstatement, suppression of facts to evade tax, or similar grounds. Since no notice under Section 74 had been issued, the assessment order was stated to be contrary to law and in violation of the principles of natural justice.
Respondent’s Stand
The learned Special Government Pleader confirmed that although the notice in Form DRC-01 had been issued, the petitioner had not submitted any reply, following which the impugned order was passed. The respondent requested the Court to pass appropriate orders.
High Court’s Findings
The Court observed that it was an admitted fact that the notice had been issued under Section 73, while the final assessment order had been passed under Section 74. The Court held that if the respondent intended to pass an order under Section 74, a notice satisfying the conditions prescribed under that provision was required. Since no such notice had been issued, the respondent could not pass an order under Section 74. The Court held that the impugned order was not only contrary to the provisions of law but also violated the principles of natural justice.
Directions Issued
The High Court set aside the assessment order dated 24.05.2024 and remanded the matter to the respondent for fresh consideration.
The Court directed the petitioner to treat the assessment order dated 24.05.2024 as a notice issued under Section 74 and file its reply or objections, along with supporting documents, within three weeks from receipt of the Court’s order.
The respondent was directed to consider the reply, issue a clear 14-day notice fixing the date of personal hearing, hear the petitioner, and thereafter pass appropriate orders on merits and in accordance with law as expeditiously as possible.
Accordingly, the writ petition was disposed of, with no order as to costs, and the connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition has been filed challenging the impugned order dated 24.05.2024 passed by the respondent.
2. Mr. G.Nanmaran, learned Special Government Pleader, takes notice on behalf of the respondent. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
3. The learned counsel for the petitioner would submit that in this case, though the show cause notice in DRC-01 dated 27.12.2023 was issued under Section 73 of the Goods and Services Tax Act, 2017 (hereinafter called as “GST Act”), the impugned order came to be passed by the respondent under Section 74 of the GST Act on 24.05.2024.
4. He would also submit that if the respondent is intend to pass an assessment order under Section 74 of the GST Act, they are supposed to have issued a notice under Section 74 of the GST Act, satisfying the ingredients stated in the said Section, viz., fraud, wilful-misstatement or suppression of facts to evade tax, etc. However, in this case, no such notice was issued by the respondent. Hence, at any cost, no order can be passed under Section 74 of the GST Act. Therefore, he would contend that the said impugned order is not only in violation of principles of natural justice but also in violation of law.
5. In reply, the learned Special Government Pleader appearing for the respondent had also confirmed the submissions made by the petitioner and would submit that though the notice in Form DRC-01 was issued by the respondent, the petitioner had failed to file their reply. Under these circumstances, the impugned order came to be passed by the respondent. Hence, he requests this Court to pass appropriate orders.
6. Heard the learned counsel for the petitioner and the learned Special Government Pleader appearing for the respondent and also perused the materials available on record.
7. In the case on hand, it is an admitted fact that though the notice in Form DRC-01 was issued under Section 73 of the GST Act, the impugned order was passed under Section 74 of the GST Act. As contended by the petitioner, if at all if there is an intention to pass any assessment order under Section 74 of the GST Act, the respondent is supposed to have issued a notice by fulfilling the conditions narrated under Section 74 of the GST Act. In this case, it is apparent that no such notice was issued under Section 74 of the GST Act. When such being the case, no order can be passed by the respondent under Section 74 of the GST Act and hence, the impugned order passed by the respondent is not only in violation of principles of natural justice but also against the provision of law.
8. In view of the above, this Court is inclined to set aside the impugned order passed by the respondent. Accordingly, this Court passes the following order:-
(i) The impugned order dated 24.05.2024 is set aside and the matter is remanded to the respondent for fresh consideration.
(ii) The petitioner is directed to consider the aforesaid assessment order dated 24.05.2024 as a notice issued under Section 74 of the GST Act and file their reply/objection along with the required documents, if any, within a period of three weeks from the date of receipt of copy of this order.
(iii) On filing of such reply/objection by the petitioner, the respondent shall consider the same and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
9. With the above directions, this writ petition is disposed of. No costs. Consequently, the connected miscellaneous petitions are also closed.
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