Only on the basis of Intimation of Tax Ascertained as being payable in DRC-01A [without Show Cause Notice u/s 73(1)/74(1)], no assessment order can be finalised

[Ref: Anantham Silks Vs State Tax Office (Madras High Court) in Writ Petition (MD) Nos. 11391, 11399, 11403 and 11406 of 2022, common judgment dated 20.06.2022]

In the aforesaid matter, it is seen that there was a surprise inspection in the petitioner’s showrooms, Office and Godown from 14.09.2021 to 16.09.2021 and certain defects were pointed out and thereafter, explanation sought for. Though the petitioner had sent their objections and their authorized representative/Chartered Accountant appeared before the respondent, but they were unable to give proper explanation with supporting documents. This is a merit of the case.

It is seen that after issuance of notice in Form DRC-01A, dated 06.12.2021, the respondent has issued Form GST DRC-01A. Thereafter, if the petitioner has got any objection and not paid tax as ascertained, a show cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving personal hearing, the assessment order ought to have been finalised. In this case, procedure not followed. It is also seen that following the impugned order, the respondent vide Form GST DRC-09, issued a communication, directing the Branch Manager, Axis Bank, Ramanathapuram, to recover the amount due from the petitioner under Section 79 of the TNGST Act, 2017, which is not proper. In view of the same, the assessment orders, bearing Assessment Nos.33AASFA2666A1ZP/2019-20, 33AASFA2666A1ZP/2018-19, 33AASFA2666A1ZP/2020-21 and 33AASFA2666A1ZP/2017-18, dated 31.01.2022, are hereby quashed. The consequential recovery notice, dated 10.06.2022, issued to the Branch Manager, Axis Bank, is also hereby quashed. The respondent is directed to issue notice after following the procedures prescribed under the TNGST Act and issue show cause notice and after giving an opportunity to file their objections, pass appropriate orders on merits and in accordance with law. The entire process is to be completed as expeditiously as possible without delay.

In this matter, the respondent proceeded to pass the assessment order, confirming the proposals in the notice dated 06.12.2021. The above said order has been passed in violation of principles of natural justice inasmuch as no show cause notice as envisaged in Section 73 or 74 of the TNGST/CGST Act has been issued before passing the order, there is unfairness, unreasonableness in the action of the respondent.

*****

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.

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