2021 (5) TMI 262 - HC - GST

Violation of principles of natural justice - validity of assessment order - Assessing Authority has noted certain discrepancies in the invoices accompanied by e-way bills - TNGST Act - HELD THAT - 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. 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, constitutes principles of violation of natural justice. 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 - Petition disposed off.

Summary

Issues: Violation of principles of natural justice in assessment order under TNGST Act, 2017

Detailed Analysis:

Issue 1: Violation of Principles of Natural Justice
The petitioner challenged an assessment order dated 08.01.2021 under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act, 2017) citing a violation of natural justice principles. The Assessing Officer noted discrepancies in invoices accompanied by e-way bills in a notice dated 29.05.2020. The petitioner responded on 23.12.2020 requesting a copy of the statement relied upon by the respondent. The Assessing Authority mentioned that the supplier admitted to not receiving any inward or engaging in outward supply in a statement recorded by the Central GST Authorities. The officer proposed that the transaction was not genuine, accusing the petitioner of bill trading. Despite the petitioner's request to see the statement recorded by the third party dealer and to cross-examine the dealer, the impugned order was passed without providing the statement to the petitioner or granting an opportunity to be heard.

Issue 2: Lack of Opportunity to Peruse Statement
The assessment order's conclusion was based on the statement recorded by the third party dealer, which the petitioner was not allowed to peruse or object to. The court found that the petitioner should have been given the chance to review the statement and raise objections, as the failure to do so amounted to a violation of natural justice principles.

Judgment
The High Court set aside the impugned order and directed that the statement and other relevant particulars relied upon by the Officer be provided to the petitioner within three weeks. Subsequently, the petitioner would be granted a hearing to present submissions and file objections. The Officer was instructed to pass a speaking order within six weeks from the date of the first hearing. The Writ Petition was disposed of with no costs, and the connected Miscellaneous Petition was closed.