2023 (6) TMI 1188 - HC - GST

Validity of order of assessment passed under the provisions of Section 74 of the TNGST Act - case of petitioner is that petitioner are that the impugned order of assessment is grossly in violation of principles of natural justice - HELD THAT - The show-cause notice issued under Section 74 is evidently a continuation of the proceedings initiated under notice in DRC 01A dated 23.01.2023. In fact, that notice under DRC 01A has itself been issued under threat of further proceedings under Section 74 and thus, the connection or nexus, in my considered view, has been clearly established. The annexures filed along with DRC 01A reveal the identity of the allegedly non-existent suppliers as M/s.Baby Suba Company as well as the details of transactions inter se and thus, the petitioner is well aware of the specifics of the proposal and is conscious of the fact that the show-cause notice relates to, and is in continuation of the earlier proceedings. The procedure adopted aligns with the statutory scheme of the Act as well. The petitioner states that (i) it is aware of the issue raised relating to allegedly fraudulent purchases made from M/s.Baby Suba and Company, Chennai and (ii) further, that it was in possession of documents to establish the purchases. In the conclusion of paragraph 5, the petitioner states that supporting documents will be filed at the time of personal hearing. Paragraph 6 relates to the proposal for levy of penalty to which the petitioner objects stating that there was no statutory provision mentioned in relation to which penalty is sought to be levied. The impugned order has come to be passed in GST DRC 07 dated 12.04.2023 wherein, in the absence of any supporting materials as promised by the petitioner and also no appearance on 05.04.2023, when the matter was fixed for personal hearing, the assessing authority has proceeded to confirm the proposals. There are no legal infirmity in the procedure followed by the assessing authority in passing the impugned order. It is incumbent upon an assessee to cooperate in the course of assessment proceedings and provide effective responses to the show-cause notice as well as avail of the opportunity for personal hearing - petition dismissed.

Summary

Issues involved:
The issues involved in the judgment are related to the assessment order passed under Section 74 of the Tamil Nadu Goods and Service Tax Act, 2017, challenged by a sole proprietary registered dealer. The petitioner raised concerns regarding the violation of principles of natural justice in the assessment proceedings.

Details of the Judgment:

1. Violation of Principles of Natural Justice:
The petitioner contended that the assessment order was in violation of principles of natural justice. The respondent initially issued a notice under DRC 01A, alleging fraudulent availment of Input Tax Credit (ITC) from a non-existent supplier, M/s. Baby Suba and Company. The petitioner disputed this notice and requested its withdrawal. Subsequently, a show-cause notice was issued under Section 74(1) of the Act, which the petitioner also objected to, claiming lack of specificity regarding the transactions connected to the erroneous availment/utilization of ITC.

2. Continuation of Proceedings:
The Court observed that the show-cause notice under Section 74 was a continuation of the proceedings initiated under the earlier notice in DRC 01A. The annexures in DRC 01A clearly identified the alleged non-existent supplier and provided details of the transactions, establishing a connection between the two notices. The Court held that the petitioner was well aware of the specifics of the proposal and the continuity of the proceedings, aligning with the statutory scheme of the Act.

3. Cooperation in Assessment Proceedings:
Despite the petitioner's awareness of the issues raised and the opportunity for a personal hearing, the petitioner failed to provide the supporting documents promised in the reply. Additionally, the petitioner did not appear for the scheduled personal hearing, forfeiting the benefit extended. The Court emphasized the importance of an assessee's cooperation in assessment proceedings, including providing effective responses to show-cause notices and availing opportunities for personal hearings.

4. Confirmation of Assessment Order:
Considering the lack of cooperation from the petitioner, including the absence of supporting materials and failure to appear for the personal hearing, the assessing authority proceeded to confirm the proposals in the impugned order dated 12.04.2023. The Court found no legal infirmity in the procedure followed by the assessing authority and dismissed the writ petition, leaving the petitioner to pursue alternate remedies in accordance with the law.

In conclusion, the judgment addressed the issues of natural justice, continuation of proceedings, cooperation in assessment proceedings, and confirmation of the assessment order, emphasizing the importance of compliance and cooperation from the assessee in tax assessment matters.