Case Law Details
Vadakkoot Chackoo Devassy Vs Assistant State Tax Officer (Kerala High Court)
Kerala High Court (HC) Quashes Assessment Order Due to Non-Service of GST ASMT-10 and Show Cause Notice (SCN)
In a recent judgment, the Kerala High Court addressed a writ petition filed by Vadakkoot Chackoo Devassy against the Assistant State Tax Officer. The petitioner sought various reliefs, including the quashing of Exhibit P5 order and P6 summary of order in Form GST DRC-07, asserting that they were barred by limitation and against the principles of natural justice. The court, in its decision, provided crucial insights into the violation of natural justice in the issuance of notices and set aside the assessment order.
Background: The petitioner raised three primary issues in the writ petition:
i. Quashing Exhibit P5 order and P6 summary of order in Form GST DRC-07 as barred by limitation and against the principle of natural justice.
ii. Invoking powers under Section 172 of the CGST/SGST Act, 2017, to address difficulties faced by taxable persons to avail input tax credit claimed through belatedly filed returns.
iii. Declaring Section 16(4) of the CGST/SGST Act, 2017, as ultra vires to Section 16(1) and 16(2) of the CGST Act and as unconstitutional.
Key Points of the Judgment:
i. Non-Physical Service of Notices:
- The court noted that the petitioner was issued a notice in Form GST ASMT-10 under Rule 99(1) of the Central Goods and Services Tax Rules, 2017/State Goods and Services Tax Rules, 2017, on September 29, 2023.
- Subsequently, on the very next day, a show cause notice under Section 73 of the Central Goods and Services Tax Act, 2017/State Goods and Services Tax Act, 2017, was issued.
- The petitioner contended that no official copy of the notices was served physically, and the same were only uploaded on the GST portal.
ii. Violation of Natural Justice:
- The court found merit in the petitioner’s submission, noting that the petitioner was not provided any time to respond to the notice in GST ASMT-10.
- Given that the petitioner’s GST registration was cancelled before the notices were uploaded, there was a violation of the principles of natural justice.
iii. Setting Aside the Assessment Order:
- In light of the observed violation of natural justice, the court set aside the assessment order, Exhibit P5.
- The matter was remanded back to the assessing authority (1st respondent) to pass a fresh order.
- The petitioner was granted the opportunity to file a reply to the show cause notice dated September 30, 2023, within three days.
iv. No Limitation Grounds: The petitioner-assessee was barred from raising any ground regarding the limitation in finalizing the assessment for the assessment year 2017-18.
Conclusion: With this judgment, the Kerala High Court emphasized the importance of adhering to principles of natural justice in the assessment proceedings. The court’s decision to set aside the assessment order and provide an opportunity for a fresh assessment underscores the significance of fair and transparent processes in matters related to GST assessments
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed seeking the following reliefs:
“i. issue a WRIT OF CERTIORARI or any other appropriate writ, order or direction under Article 226 of the Constitution of India, quashing Exhibit P5 order and P6 summary of order in Form GST DRC-07 passed by the 1st respondent as barred by limitation and against the principle of natural justice, or pass such further or other orders as may deem fit and proper in the circumstances of this case, and render justice;
ii. direct to invoke powers under section 172 of the CGST/SGST Act, 2017 to remove the difficulties faced by the taxable persons to avail input tax credit which was claimed through the returns filed belatedly without any specific time limit;
iii. to declare section 16(4) of the CGST/SGST Act, 2017 as ultravies to section 16(1) and 16(2) of the CGST Act as well as unconstitutional.”
2. Notice in Form GST ASMT-10 under Rule 99(1) of the Central Goods and Services Tax Rules, 2017/State Goods and Services Tax Rules, 2017 was issued to the petitioner on 29.9.2023 and on the very next day, a show cause notice under Section 73 of the Central Goods and Services Tax Act, 2017/State Goods and Services Tax Act, 2017 came to be issued. Learned counsel for the petitioner submits that no official copy of the notice either in GST ASMT-10 or the show cause notice dated 30.9.2023 under Section 73 was issued to the petitioner physically and the same were uploaded in the GST portal. Since the petitioner’s registration had been cancelled before issuance of the said notices, the petitioner did not file reply to the said show cause notices. Otherwise, the petitioner was not granted any time in the notice so issued in GST ASMT-10 and therefore, there has been violation of the principles of natural justice in passing the assessment order, Ext.P5.
3. Prima facie, I find some substance in the submission advanced by the learned counsel for the petitioner. Notice in Ext.P2 disclosed that it is dated 29.9.2023 and on the very next day, Ext.P3 notice under Section 73 was issued. The petitioner was not afforded any time for filing reply to the notice in GST ASMT-10.
4. It is also not in dispute that the petitioner’s GST registration was cancelled before the said notices were uploaded in the GST portal.
5. In view thereof, I find that there is violation of the principles of natural justice and, therefore, the impugned assessment order, Ext.P5, is unsustainable and the same is hereby set aside. The matter is remanded back to the file of the assessing authority, 1st respondent, to pass fresh a order. The petitioner is permitted to file reply to the show notice dated 30.9.2023, Ext.P3, within a period of three (3) days from today. If the petitioner files reply as above, he shall be afforded an opportunity before finalising the fresh assessment and order shall be passed as directed above by the assessing authority. The petitioner-assessee will not take any ground regarding the limitation in finalising the assessment for the assessment year 2017-18.
With the aforesaid observations and directions, the present writ petition stands finally disposed of. Pending interlocutory application, if any, in the present writ petition stands dismissed.
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