Case Law Details

Case Name : Sri Muniappa Steels Vs Assistant Commissioner (Madras High Court)
Appeal Number : W.P. No. 10489 of 2019
Date of Judgement/Order : 27/04/2021
Related Assessment Year :

Sri Muniappa Steels Vs Assistant Commissioner (Madras High Court)

GST: Assessment order passed without supplying the third party evidence relied on: Set aside by the Madras HC on grounds of violation of principles of natural justice.

An assessment order passed under the GST laws, based on a statement given by a third party dealer for which the assessee has no access is totally unsustainable before law since it is passed in gross violation of the principles of natural justice, is the ratio laid down by the Hon’ble High Court of Madras in Sri Muniappa Steels Vs. The Assistant Commissioner (ST) Singanallur North Circle, Coimbatore (No.- W.P. No.10489 of 2019 And WMP No.11086 of 2019 dated: 27.04.2021)

Facts of the case

  • The Assessing Officer has issued a notice in terms of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act, 2017) dated: 14.12.2020 to the petitioner. This notice has reference of a notice dated: 29.05.2020 which indicates certain discrepancies in the invoices accompanied by e-way bills. In the show cause notice, the Assessing Officer alleges that the supplier (a third party dealer as far as the petitioner is concerned) had admitted in his statement recorded by the Central GST Authorities, stating that they had neither received any inward nor engaged in outward supply.
  • The officer thus proposes to arrive at a conclusion that the transaction was not genuine and the petitioner was engaging in bill trading. In response, the petitioner has filed a reply on 23.12.2020 specifically requiring a copy of the statement relied upon by the Assessing Officer for the proposed assessment, reserving his right to cross examine the dealer as well as to file objections to the same. The impugned order has come to be passed without hearing the petitioner and admittedly, without supplying the statement relied upon by the Officer.

Held by the High Court

  • That, the conclusion in the assessment order, in fact, mentions the statement recorded by the third party dealer and in the light of the fact that this statement forms the basis of assessment, the petitioner ought to have been granted opportunity to peruse the statement and put forth its objections to the same. This has not been done, which constitutes violation of the principles of natural justice.
  • The impugned order is thus set aside. Let the statement and other particulars relied upon by the Officer in the impugned order of assessment be supplied to the petitioner within a period of three (3) weeks from the date of judgment. Thereafter, the petitioner shall be afforded an opportunity of hearing to put forth its submission and also file objections. Upon consideration thereof, a speaking order shall be passed by the Officer within a period of six (6) weeks from the date of first hearing.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

Mr. ANR. Jayaprathap, learned Government Advocate accepts notice for the respondent and is armed with instructions to proceed with the matter finally, even at the stage of admission. Hence, by consent of both sides, this Writ Petition is disposed finally even at this stage. This is also for the reason that the sole ground that has been argued before me is violation of principles of natural justice.

2. The challenge is to order of assessment dated 08.01.2021 passed in terms of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act, 2017). In the summary of notice dated 14.12.2020 the Assessing Officer has referred to notice dated 29.05.2020, wherein the Assessing Authority has noted certain discrepancies in the invoices accompanied by e-way bills.

3. The petitioner has replied to the Officer on 23.12.2020 specifically requiring a copy of the statement relied upon by the respondent. In the show cause notice, the Assessing Authority states that the supplier had admitted in his statement recorded by the Central GST Authorities, stating that they had neither received any inward nor engaged in outward supply. The officer thus proposes to arrive at a conclusion that the transaction was not genuine and the petitioner was engaging in bill trading. In response, the petitioner has specifically sought the statement recorded by the third party dealer reserving his right to cross examine the dealer as well as to file objections to the same. The impugned order has come to be passed without hearing the petitioner and admittedly, without supplying the statement relied upon by the Officer.

4. The conclusion in the assessment order, in fact, mentions the statement recorded by the third party dealer and in the light of the fact that this statement forms the basis of assessment, the petitioner ought to have been granted opportunity to peruse the statement and put forth its objections to the same. This has not been done, which, in my view, constitutes principles of violation of natural justice.

5. The impugned order is thus set aside. Let the statement and other particulars relied upon by the Officer in the impugned order of assessment be supplied to the petitioner within a period of three (3) weeks from today. Thereafter, the petitioner shall be afforded an opportunity of hearing to put forth its submission and also file objections. Upon consideration thereof, a speaking order shall be passed by the Officer within a period of six (6) weeks from date of first hearing.

6. This Writ Petition is disposed as above. No costs. Connected Miscellaneous Petition is closed.

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Author/Blogger:  Aji V. Dev, Advocate, High Court of Kerala at Aji V. Dev & Associates, Ernakulam, Kochi, available at [email protected]/[email protected]/9447788404

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