Case Law Details
Tvl. Popular Mega Motors (India) Private Limited Vs Union of India (Madras High Court)
Introduction: This article delves into a legal case involving a State Tax Officer in Chennai issuing a show cause notice after an inspection. The taxpayer raised objections, alleging bias as the investigating officer proceeded with the adjudication. The matter reached the Madras High Court, challenging the violation of principles of natural justice.
Detailed Analysis:
1. Background of Inspection and Show Cause Notice: The State Tax Officer, after an inspection, issued a show cause notice on 29.01.2024, leading to objections from the taxpayer. The crux of the issue was the officer responsible for inspection also conducting the adjudication.
2. Preliminary Objections and SCNs: The taxpayer raised objections, contending that the investigating officer should not continue with the adjudication process. Despite this, the State Tax Officer issued a show cause notice under Section 73, scheduling a personal hearing before herself.
3. Legal Proceedings before Madras HC: The taxpayer filed a writ petition before the Madras High Court, arguing that adjudication by the same officer who conducted the inspection violated principles of natural justice. The Revenue acknowledged the deficiency and cited a state circular requiring the transfer of the case from the inspecting officer.
4. Madras HC Ruling: The Madras High Court disposed of the writ petition, acknowledging the violation of principles of natural justice. The court directed that assessment proceedings should be conducted by an officer other than the inspecting officer who issued the show cause notice.
5. Circulars and Legal Reference: The legal arguments involved references to Circular No.13/2022-TNGST and the judgment of the Hon’ble Supreme Court in Ashok Kumar Yadav and others v. State of Haryana and others (1985) 4 SCC 417.
6. Role of Assistant Commissioner: The assessment proceedings, during the pendency, were transferred to Mr. Sridharan, Assistant Commissioner, complying with the circular and ensuring impartiality in the adjudication process.
7. Resolution and Future Proceedings: The petitioner is directed to respond to the show cause notice through the GST portal, with a condition that assessment proceedings will be conducted only by an officer other than the inspecting officer.
Conclusion: This legal case highlights the importance of avoiding bias in adjudication processes, with the Madras High Court emphasizing the transfer of proceedings to ensure fairness. The directive provides clarity on principles of natural justice, setting a precedent for similar cases and underscoring the significance of an impartial adjudicating authority in GST matters.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this writ petition, the petitioner challenges a show cause notice dated 29.01.2024.
2. Pursuant to an inspection under Section 67 of the State Goods and Services Tax Act, 2017, the show cause notice impugned herein came to be issued.
3. Learned counsel for the petitioner assails the show cause notice primarily on the ground that such notice was issued by the officer who undertook inspection under Section 67. By relying on the judgment of the Hon’ble Supreme Court in Ashok Kumar Yadav and others v. State of Haryana and others, (1985) 4 SCC 417, he submits that the Hon’ble Supreme Court concluded that the necessity to ensure that no person should be a judge in his own cause extends to proceedings undertaken by quasi-judicial and even administrative authorities. He also relied upon a Circular dated 09.02.2018 of the Central Board of Excise and Customs in this connection.
4. In response to these contentions, Mr. C. Harsha Raj, learned Additional Government Pleader, has placed on record Circular No.13/2022-TNGST dated 08.11.2022. With reference thereto, he submitted that the inspecting officer is required to issue the show cause notice covering all issues identified for adjudication. If the tax payer declines to pay tax, interest and penalty and contests the demand made in the show cause notice, he states that the Circular envisages that the relevant file be transferred to some other proper officer working under the control of the Joint Commissioner (Intelligence). In the case at hand, he submits that the assessment proceedings pertaining to the petitioner were transferred by the inspecting officer to Mr. Sridharan, Assistant Commissioner.
5. On instructions, learned Additional Government Pleader, further submits that the assessment proceedings of the petitioner for other assessment periods and arising out of inspection were also transferred to the same Assistant Commissioner. This statement is recorded.
6. Learned counsel for the petitioner referred to the show cause notice and raised the objection that such show cause notice provides for a personal hearing before the inspecting officer.
7. Upon considering the above submissions, it is clear that the grievance of the petitioner would stand resolved if the reply of the petitioner is made through the GST portal and such reply is considered and all further proceedings are undertaken by Mr. Sridharan, Assistant Commissioner, or any proper officer other than the inspecting officer.
8. Therefore, W.P.No.4112 of 2024 is disposed of by directing the petitioner to reply to the show cause notice dated 29.01.2024 subject to the condition that the assessment proceedings shall be undertaken only by an officer other than the inspecting officer who issued the impugned show cause notice. The petitioner’s reply to the show cause notice shall be issued within a maximum period of 30 days from the date of receipt of a copy of this order. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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