2025 (1) TMI 1070 - HC - GST

Principles of natural justice - service of notice - petitioner was given adequate notice and opportunity to respond to the discrepancies identified in their tax filings as required under the Goods and Services Tax Act 2017 or not - HELD THAT - Taking into account the peculiar facts of the case wherein the petitioner has already remitted more than 25% (almost 90%) of the disputed taxes this court is of the view that the petitioner may be granted one final opportunity to put forth his objection which was not objected to by the learned Special Government Pleader for the respondent. The impugned order dated 26.06.2024 is set aside - The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

a) Whether the petitioner was given adequate notice and opportunity to respond to the discrepancies identified in their tax filings, as required under the Goods and Services Tax Act, 2017.

b) Whether the impugned order dated 26.06.2024 was validly served upon the petitioner, thereby allowing them to participate in the adjudication process.

c) Whether the petitioner is entitled to have the impugned order set aside and be granted an opportunity to present their objections, given the circumstances of the case.

d) What conditions should be imposed on the petitioner for the reconsideration of the disputed tax assessment?

2. ISSUE-WISE DETAILED ANALYSIS

a) Adequacy of Notice and Opportunity to Respond

Relevant Legal Framework and Precedents: Under the Goods and Services Tax Act, 2017, taxpayers must be given proper notice and an opportunity to respond to any discrepancies or issues identified in their tax filings. The procedural fairness requires that notices are served in a manner that allows the taxpayer to participate in the process.

Court's Interpretation and Reasoning: The court acknowledged that the petitioner claimed not to have received the show cause notice or the impugned order in a manner that allowed them to respond, as these were uploaded on the GST portal rather than being directly served.

Key Evidence and Findings: The petitioner did not respond to the notices or attend personal hearings, allegedly due to lack of awareness of the proceedings, as the documents were not served directly.

Application of Law to Facts: The court considered the petitioner's argument that they were unaware of the proceedings due to improper service of notice and found merit in granting them another opportunity to address the discrepancies.

Treatment of Competing Arguments: The respondent did not object to the petitioner being granted another opportunity, which influenced the court's decision.

Conclusions: The court concluded that the petitioner should be given a final opportunity to present their objections, considering the procedural lapses in serving the notices.

b) Validity of Service of the Impugned Order

Relevant Legal Framework and Precedents: Proper service of notices and orders is a fundamental requirement in tax proceedings to ensure the taxpayer is informed and can respond appropriately.

Court's Interpretation and Reasoning: The court noted that the impugned order was not served by traditional means but was uploaded on the GST portal, which may not have adequately informed the petitioner.

Key Evidence and Findings: The petitioner argued that they were unaware of the order due to its method of service, and the respondent did not contest this claim.

Application of Law to Facts: The court found that the service of the order was insufficient to ensure the petitioner was aware of the proceedings, warranting a reconsideration of the service method.

Treatment of Competing Arguments: The lack of objection from the respondent supported the court's decision to set aside the impugned order.

Conclusions: The court determined that the method of serving the order was inadequate, justifying setting aside the order and allowing the petitioner another chance to respond.

c) Entitlement to Set Aside the Impugned Order

Relevant Legal Framework and Precedents: The court referred to a similar case where the matter was remanded for reconsideration upon payment of a portion of the disputed taxes.

Court's Interpretation and Reasoning: The court considered the petitioner's substantial payment of disputed taxes and the precedent of remanding similar cases for reconsideration.

Key Evidence and Findings: The petitioner had already paid more than 90% of the disputed taxes, demonstrating their willingness to comply with tax obligations.

Application of Law to Facts: The court applied the precedent of remanding cases for reconsideration upon partial payment of disputed taxes, given the petitioner's substantial payment.

Treatment of Competing Arguments: The respondent's lack of objection to remanding the case influenced the court's decision.

Conclusions: The court concluded that setting aside the impugned order and granting the petitioner an opportunity to present objections was appropriate, subject to conditions.

d) Conditions for Reconsideration of Disputed Tax Assessment

Relevant Legal Framework and Precedents: The court imposed conditions for reconsideration, similar to those in previous cases, to ensure compliance and fairness.

Court's Interpretation and Reasoning: The court required the petitioner to deposit 25% of the disputed taxes as a condition for reconsideration, with adjustments for any amounts already paid.

Key Evidence and Findings: The petitioner had already paid a significant portion of the disputed taxes, which was considered in setting the conditions.

Application of Law to Facts: The court applied the principle of fairness by allowing the petitioner to present objections while ensuring tax compliance through the deposit condition.

Treatment of Competing Arguments: The conditions were agreed upon by both parties, facilitating the court's decision.

Conclusions: The court concluded that the conditions imposed were fair and necessary to balance the petitioner's right to respond with the need for tax compliance.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned order dated 26.06.2024 is set aside... The petitioner shall deposit 25% of the disputed taxes... If any amount has been recovered or paid out of the disputed taxes, including by way of pre-deposit in appeal, the same would be reduced/adjusted."

Core Principles Established: The judgment reinforces the principles of procedural fairness in tax proceedings, emphasizing the need for proper service of notices and orders to ensure taxpayers can respond adequately. It also highlights the court's discretion to remand cases for reconsideration upon partial payment of disputed taxes.

Final Determinations on Each Issue: The court set aside the impugned order due to inadequate service and granted the petitioner an opportunity to present objections, subject to depositing 25% of the disputed taxes. The court outlined specific conditions for compliance, ensuring fairness and tax compliance.