Case Law Details
Aaron Construction Co. Vs Union Of India (Kerala High Court)
The Kerala High Court recently delivered a significant judgment in the case of Aaron Construction Co. vs Union of India, concerning the application of best judgment assessment under the CGST/SGST Act. This case arose from the appellant’s challenge against an assessment order (Ext.P4) issued due to non-filing of returns.
The appellant, a registered dealer under the Act, failed to submit returns for over six months. Consequently, the assessing authority initiated cancellation proceedings against its registration and completed an assessment on a best judgment basis under Section 62 of the Act. Despite receiving the assessment order, the appellant did not file returns within the stipulated period, which could have nullified the assessment.
During the proceedings, the appellant argued that the assessing authority had not issued a formal notice before passing the best judgment assessment order, as mandated by Section 62(1) of the Act. However, the court observed that while the notice requirement wasn’t met, the appellant’s failure to file returns within the specified timeframe (Section 62(2)) was detrimental to its case.
The court emphasized that the appellant, being aware of the assessment order, did not take corrective action within the allowed period, thereby demonstrating non-cooperation in the assessment process. The judgment highlighted the statutory provision’s intent to encourage timely compliance by assessees and affirmed the lower court’s decision to dismiss the writ petition challenging the assessment order.
In conclusion, the Kerala High Court upheld the principle that non-filing of returns within the prescribed period after receiving a best judgment assessment order is fatal for an assessee’s case. Despite procedural lapses on the part of the assessing authority, the appellant’s failure to act in accordance with Section 62(2) led to the dismissal of its appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner in W.P(C)No.11992 of 2024 is the appellant herein aggrieved by the judgment dated 03.04.2024 of the learned Single Judge in the writ petition.
2. Briefly stated the facts necessary for disposal of this writ appeal are as follows:
The appellant herein had preferred the writ petition impugning Ext.P4 best judgment assessment order passed by the assessing authority under Section 62 of the CGST/SGST Act (‘the Act’ for short). It is apparent that the appellant who was obliged to file returns under the Act, in its capacity as a registered dealer, failed to submit returns for more than six months and therefore, steps were taken by the assessing authority for cancellation of its registration under the Act. Simultaneously, the assessment on best judgment basis under Section 62 of the Act was also completed taking note of the fact that the appellant had not filed any return as provided under the Section. What is relevant however is that, even after receipt of the assessment order under Section 62, the appellant did not avail the opportunity of filing a return as provided under Section 62(2) of the Act which, if filed, could have resulted in an automatic cancellation of the assessment order passed on best judgment basis. Taking note of the said omission on the part of the appellant, the learned Single Judge before whom the writ petition came up for hearing, proceeded to dismiss the writ petition in its challenge against Ext.P4 assessment order.
3. Before us, it is the submission of the Sri. K. T. Thomas, the learned counsel for the appellant that the learned Single Judge ought to have found that the respondents had not complied with the requirement of issuing a notice prior to passing the order on best judgment basis under Section 62(1) of the Act. It is the further contention that the appellant being a new venture, it was not aware of the requirements of the statute with regard to filing of returns and the consequences of non filing of the said returns.
4. Per contra, it is the submission of Sri. Harishankar, the learned Standing Counsel for the 3rd respondent, that the non filing of return even after the receipt of the assessment order passed on best judgment basis under Section 62(2) of the Act indicates that the attitude of the appellant-assessee was one of non-co-operation in the assessment proceedings. It is pointed out that the assessment order passed under Section 62 would have to be upheld in the absence of any positive step taken by the appellant to get the same nullified in terms of Section 62(2) of the Act. As regards the cancellation of the registration, it is his submission that if the appellant is aggrieved by the same, it is open to the appellant to approach the statutory appellate authority against the order of cancellation of registration.
5. On a consideration of the rival contentions, we are of the view that the non filing of returns by the appellant, even after receipt of Ext.P4 assessment order, and within thirty days thereafter, is fatal to the case of the appellant. While it may be true that the respondents did not issue a formal notice as required under Section 62(1) of the Act before completing the assessment on best judgment basis under the said provision, the fact remains that the appellant could have obtained a nullification of the said assessment order, if he had filed the return at least within thirty days of the receipt of the assessment order. It is not in dispute that the appellant received the assessment order. It is also not in dispute that within thirty days thereafter, he did not file his returns. Under such circumstance, the appellant has only itself to blame for the predicament that it finds itself in, since the statutory provisions grant sufficient opportunities to an assessee to ensure that an assessment is completed, as far as possible, based on the returns filed by the assessee.
We therefore, see no reason to interfere with the impugned judgment of the learned Single Judge. The writ appeal fails and is accordingly dismissed.
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