2021 (7) TMI 337 - HC - GST

Validity of assessment order - clients were not provided adequate opportunity to submit the documents - violation of principles of natural justice - HELD THAT - No doubt, the country was reeling under the COVID-19 pandemic, which may have caused inconvenience to petitioner in participating in the hearing. However, nothing prevented him from communicating this fact to the assessing authority and seek adjournment in the matter - the petitioner has annexed documents to show that bills were submitted prior to the introduction of GST Act, 2017 and it is claimed in view of taxes being deducted at source by the Government department the petitioner cannot be saddled with liability under GST Act. As such materials had not been placed before the assessing authority, the said authority had no occasion to consider tax liability from such angle. To strike a balance between the indolence of petitioner in not responding to the notice and participating in the hearing culminated in passing the impugned orders on one hand and the necessity of fair adjudication based on all relevant materials, the matter is remanded for fresh hearing subject to conditions. Petition allowed by way of remand.

Summary

Issues:
Assessment orders imposing tax, penalty, and interest for discrepancies in reported turnovers, violation of principles of natural justice and fair procedure, impact of COVID-19 lockdown on proceedings, consideration of relevant documents, necessity of fair adjudication, suspension of impugned orders, remand for fresh hearing, deposit requirement, timeline for fresh orders, avoidance of unnecessary adjournments, independent reconsideration, continuation of impugned orders in case of failure to deposit.

Analysis:
The writ petitions challenged assessment orders for discrepancies in reported turnovers from works contracts with the Forest Department. The petitioner argued that due to a lockdown, they couldn't submit relevant documents to exempt tax liability, alleging a violation of natural justice. The Assistant Government Pleader contended that the petitioner had the opportunity to respond but failed to do so, leading to the impugned orders.

The Court acknowledged the impact of the COVID-19 pandemic on proceedings but noted that the petitioner could have communicated difficulties to seek an adjournment. They distinguished a previous case cited by the petitioner based on the timing of events during the lockdown. While the petitioner claimed tax liability exemption due to deductions at the source, as relevant documents were not submitted to the assessing authority, this aspect was not considered.

To balance the petitioner's inaction in responding to notices and the need for fair adjudication, the Court decided to remand the matter for a fresh hearing under specific conditions. The petitioner was directed to deposit 10% of the tax, penalty, and interest within four weeks for the impugned orders to be suspended. The assessing authority was instructed to conduct a fresh hearing, consider all submitted documents, and issue new orders within eight weeks without unnecessary adjournments.

The Court emphasized that the fresh consideration should be independent, in accordance with the law, and not influenced by previous observations. If the petitioner failed to meet the deposit requirement within the specified timeframe, the impugned orders would remain in force. The writ petitions were disposed of with no order as to costs, and any related miscellaneous petitions were to be closed accordingly.