2024 (7) TMI 175 - HC - GST

Validity of assessment order - no reasonable opportunity to contest the tax demand on merits - impugned order travels beyond the scope of the SCN - Violation of principles of natural justice - HELD THAT - On examining the summary of show cause notice and detailed notice, it is clear that the detailed notice deals with eleven tax proposals. The said eleven tax proposals correspond to those specified in the earlier intimation. It is, however, noticeable that there was no proposal with regard to interest and penalty. In the impugned order, penalty was imposed at 10%. Thus, as regards interest and penalty, the petitioner did not have an opportunity to respond to the proposal. For such reason, the order calls for interference - Since the petitioner did not respond in spite of several opportunities being provided, it is just and appropriate that the petitioner be put on terms. On instructions, learned counsel for the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand. The impugned order dated 06.02.2024 shall be treated as a show cause notice and the petitioner is permitted to respond thereto within four weeks from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues:
Challenging an order in original for assessment period 2020-2021 due to lack of reasonable opportunity and order exceeding the scope of show cause notice.

Analysis:
The petitioner contested an order in original dated 06.02.2024 concerning the assessment period 2020-2021, citing reasons of not having a fair chance to contest the tax demand on merits and the order going beyond the scope of the show cause notice. An intimation was issued to the petitioner regarding defects, followed by a show cause notice addressing these defects. The petitioner claimed non-participation in the proceedings due to lack of information from the Accountant, leading to the filing of a writ petition challenging the order.

The petitioner's counsel highlighted that the tax proposal in the detailed notice exceeded the summary and did not mention interest or penalty liability, unlike the final order which imposed a 10% penalty. The respondent's counsel argued that the principles of natural justice were followed with intimation, show cause notice, and reminders, stemming from an inspection in March 2023.

Upon examination, it was found that the detailed notice covered eleven tax proposals matching the intimation, but did not include interest and penalty proposals. As the petitioner was not given a chance to respond to the interest and penalty proposal, the court decided to interfere. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand.

Consequently, the impugned order was treated as a show cause notice, allowing the petitioner to respond within four weeks and remit 10% of the disputed tax demand within that period. Upon satisfaction of the payment, the respondent was directed to provide a reasonable opportunity, including a personal hearing, and issue a fresh order within three months from the petitioner's reply. The writ petition was disposed of with no costs, and connected miscellaneous petitions were closed.