2024 (5) TMI 261 - HC - GST

Validity of assessment order - petitioner did not have a reasonable opportunity to contest the tax demand on merits - violation of principles of natural justice - tax demand arose entirely on account of belated filing of returns - HELD THAT - On perusal of the impugned order, it is evident that such order was issued entirely on the basis that returns were filed belatedly by the petitioner. It also follows from the order that the petitioner did not participate in proceedings and that the tax demand was confirmed in view of the petitioner's failure in reply. In these circumstances, solely for the purpose of providing an opportunity to the petitioner to contest the tax demand on merits, interference with the impugned order is warranted. The impugned order dated 03.03.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause notice. Petition disposed off.

Summary

Issues Involved:
The judgment involves the issue of contesting a tax demand on merits due to lack of reasonable opportunity and failure to inform the petitioner about proceedings culminating in the impugned order.

Contesting Tax Demand on Merits:
The petitioner challenged an order dated 03.03.2023, claiming they did not have a fair chance to contest the tax demand on merits. It was argued that the consultant responsible for GST compliances failed to keep the petitioner informed about the proceedings leading to the impugned order. The confirmed tax demand was attributed to belated filing of returns, and the petitioner expressed willingness to remit 10% of the disputed tax demand for a remand.

Respondent's Position and Court's Observation:
Mr. T.N.C.Kaushik, representing the respondents, highlighted that the show cause notice was followed by reminders to the petitioner. He emphasized the petitioner's delayed approach to the Court and the issuance of the order in March 2023. The impugned order was based on the petitioner's late filing of returns and non-participation in the proceedings, leading to the confirmation of the tax demand due to the petitioner's failure to reply. The Court noted the need to provide the petitioner with an opportunity to contest the tax demand on merits.

Court's Decision and Directions:
After reviewing the impugned order, the Court set it aside under the condition that the petitioner remits 10% of the disputed tax demand within two weeks of receiving a copy of the order. The petitioner was also allowed to submit a reply to the show cause notice within the same period. Upon receiving the petitioner's reply and confirming the receipt of 10% of the disputed tax demand, the first respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within two months from receiving the petitioner's reply. The case was disposed of on these terms, with no costs incurred.