Order liable to be set aside when no reasonable opportunity to submit reply is provided to Assessee after issuance of SCN
The Hon’ble Madras High Court in Brakes India (P.) Ltd. v. Assistant Commissioner (ST) [W.P. No. 36439 of 2023 dated January 3, 2024] allowed the writ petition, thereby setting aside the Impugned Order in case where no reasonable opportunity is provided to the Assessee to submit reply after issuance of Show Cause Notice (“SCN”) as the SCN is received via Email on the same day of the personal hearing.
Facts:
Revenue Department (“the Respondent”) issued a notice dated February 14, 2023, to Brakes India (P) Ltd. (“the Petitioner”) for proposing to block Input Tax Credit (“ITC”) under Rule 86A of the Central Goods and Services Rules, 2017 (“the CGST Rules”) pertaining to the purchases from the supplier claimed to be non-existent for which reply was filed by the Petitioner. Thereafter, the Petitioner was issued a Show Cause Notice dated October 9, 2023 which was received by the Petitioner via Email dated October 25, 2023. Subsequently, the Order dated October 30, 2023 (“the Impugned Order”) was issued against the Petitioner wherein the Petitioner was directed by the Respondent to reverse the ITC.
Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble High Court contending that, as per the SCN issued, the date fixed for personal hearing was the same date on which SCN was received by the Petitioner via Email.
Issue:
Whether Impugned Order is liable to be set aside when the SCN is received via Email on the same day of the personal hearing?
Held:
The Hon’ble Madras High Court in W.P.(C) No. 36439 of 2022 held as under:
- Opined that, as per the facts of the case, no reasonable opportunity was provided to the Petitioner to submit the necessary documents and provide necessary explanation to the Respondent
- Further Opined that, without expressing any opinion on the merits in the present matter, the Impugned Order requires interference.
- Held that, the Impugned Order is quashed, Hence, writ petition is allowed.
- Directed that, the Respondent Authorities should provide reasonable opportunity to the Petitioner, including a personal hearing and dispose the matter accordingly.
Conclusion: This case emphasizes the importance of providing Assessees with a fair and reasonable opportunity to present their case, especially when crucial communications such as SCN are received on the same day as the scheduled personal hearing. The Madras High Court’s intervention sets a precedent for ensuring due process in such situations, safeguarding the rights of the Assessee in tax proceedings.
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