Kerala HC Set Aside GST Assessment Orders Passed Before Reply Deadline

Elsy Joy Vs Deputy Commissioner of State Tax (Kerala High Court)

In Elsy Joy v. Deputy Commissioner of State Tax, the Kerala High Court addressed a writ petition challenging a GST assessment order issued before the taxpayer’s response deadline. The petitioner argued that although the notice (Ext.P2) provided a response deadline of July 21, 2023, the assessment order (Ext.P4) was issued on July 11, 2023, violating the stipulated response period. The petitioner contended that this premature action breached principles of natural justice, as she was denied a fair chance to present her case.

The State’s counsel argued that the petitioner had already appealed Ext.P4 but was rejected as time-barred by the Appellate Authority (Ext.P7). While an option remained for a second appeal, the court acknowledged that Ext.P4’s issuance before the response deadline rendered the initial order procedurally unjust. Concluding that this procedural breach warranted judicial intervention, the court set aside both Ext.P4 and Ext.P7. The matter was remanded for fresh consideration, granting the petitioner two weeks to file her reply and directing the Deputy Commissioner to issue a new order only after a fair hearing.

The court’s decision emphasized the importance of respecting response timelines in assessment proceedings under GST. It underscored that adherence to procedural fairness safeguards taxpayers’ rights, and any deviation may justify judicial review under Article 226 of the Constitution. By setting aside the orders, the court also provided clarity on excluding the period between Ext.P4’s issuance and the current judgment from the limitation period, ensuring a fair reassessment process.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Petitioner has approached this Court, challenging Ext.P4 order issued under the provisions of Section 73 of the CGST/SGST Acts, for the year 2017-18, on a short ground.

2. It is the case of the petitioner that, though by Ext.P2 notice dated 20.06.2023, the petitioner had given time till 21.07.2023 to file a reply, Ext.P4 order was passed on 11.07.2023, even before the time for filing reply had expired.

3. Learned Government Pleader and the learned Standing Counsel appearing for the 6^th respondent would, however, contend that the petitioner has already availed the remedy of filing an appeal against Ext.P4 order, claiming the benefit of Ext.P10 notification (issued in the matter of limitation for filing appeals), which clearly, on its terms, was not applicable to the petitioner. It is submitted that, the appeal filed by the petitioner was also rejected by Ext.P7 order finding that it was barred by limitation. It is submitted that, in such circumstances, the only remedy of the petitioner is to file a second appeal and he has not made out any ground to approach this Court under Article 226 of the Constitution of India.

4. Having heard the learned counsel appearing for the petitioner, the learned Government Pleader and the learned Standing Counsel appearing for the 6^th respondent, I am of the opinion that the petitioner is entitled to succeed. Though the petitioner may have filed an appeal against Ext.P4 order (which was rejected by Ext.P7 order as being time barred), the fact remains that Ext.P7 order was passed in violation of principles of natural justice. It is clear from Ext.P2 that the petitioner was given time till 21.07.2023 to reply to the show cause notice. Ext.P4 order appears to have been passed on 11.07.2023, even before the time for filing a reply had expired. Therefore, on this short ground, Ext.P4 order is liable to be set aside. The fact that the petitioner had filed an appeal against Ext.P4 is no ground to refuse relief to the petitioner as the original order was clearly issued in violation of principles of natural justice.

Accordingly, the writ petition is allowed by setting aside Ext.P4 order and restoring the assessment of the petitioner for the year 2017-18, to the file of the 2nd respondent, who shall pass fresh orders, after affording an opportunity of hearing to the petitioner. The petitioner shall file its reply to the show cause notice (if not already filed) within a period of two weeks from today and thereafter, the matter shall be adjudicated by the 2^nd respondent, as directed above, after hearing the petitioner. As a consequence of setting aside of Ext.P4, Ext.P7 order of the Appellate Authority also will stand set aside. Since the order has been set aside for reasons indicated above, it is directed that the time from the date of passing of Ext.P4 order till today shall be excluded for the purposes of determining any period of limitation within which such order had to be issued by the 2nd respondent.