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2024 (7) TMI 257 - HC - GSTCancellation of the GST registration of petitioner - petitioner was unaware of proceedings culminating in the impugned assessment order under Section 62 until distraint proceedings were initiated - HELD THAT - On examining the impugned assessment order, it is evident that the assessment was made on best judgment basis because the petitioner failed to respond to the notice in Form GSTR 3A. In the affidavit in support of this writ petition, he asserts that his registration was cancelled and that he was unable to carry on business due to financial stringency. In the above facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 03.03.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.
Issues:
1. Challenge to an order and consequential distraint order following cancellation of GST registration. 2. Allegation of inability to participate in proceedings due to registration cancellation. 3. Compliance with principles of natural justice in assessment under Section 62 of GST enactments. Analysis: Issue 1: Challenge to Orders The petitioner challenged an order dated 03.03.2023 and a consequential distraint order dated 16.05.2024 following the cancellation of their GST registration on 27.02.2019. The petitioner claimed unawareness of proceedings leading to the impugned assessment order under Section 62 until distraint proceedings were initiated. Issue 2: Allegation of Inability to Participate The petitioner contended that business losses led to the cancellation of their GST registration, rendering them unable to participate in the proceedings resulting in the impugned order. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand. Issue 3: Compliance with Principles of Natural Justice The Additional Government Pleader submitted that principles of natural justice were adhered to by issuing notice in Form GSTR 3A on 05.01.2023. Due to the petitioner's failure to file returns upon receipt of the notice, the assessing officer resorted to making the assessment on a best judgment basis under Section 62 of the applicable GST enactments. The court observed that the assessment was indeed based on best judgment due to the petitioner's non-response to the notice in Form GSTR 3A. Acknowledging the petitioner's financial constraints and cancellation of registration, the court deemed it necessary in the interest of justice to allow the petitioner an opportunity to contest the tax demand on merits, subject to the condition of remitting 10% of the disputed tax demand. Consequently, the impugned order dated 03.03.2023 was set aside with the condition of remittance within two weeks. The petitioner was granted the opportunity to reply to the show cause notice within the stipulated period. Upon satisfaction of the remittance and receipt of the petitioner's reply, the 1st respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within three months. The setting aside of the assessment order also led to the cancellation of the distraint order. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed as a result of the court's decision.
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