2025 (3) TMI 1129 - HC - GST

Violation of principles of natural justice - non-application of mind - failure to consider the petitioner s objections and responses to the SCN - Opportunity of hearing not provided - HELD THAT - The petitioner filed its reply on 28.10.2023 21.11.2023 29.11.2023 and 18.12.2023. However the impugned order has been passed without affording an opportunity of personal hearing to the petitioner nor even referring to the reply which amounts to gross violation of principles of natural justice. Thus the impugned order suffers from non-application of mind to the material on record. Conclusion - There is merit in the submission of the learned counsel for petitioner that the impugned order suffers from the vice of non-application of mind inasmuch as there is not even a reference to the replies referred above in the impugned order of assessment. Petition disposed off.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the impugned order dated 30.12.2023 suffers from non-application of mind due to the failure to consider the petitioner's objections and responses to the show cause notice.
Whether the principles of natural justice were violated by not affording the petitioner an opportunity for a personal hearing before passing the impugned order.
Whether the defects identified during the audit under Section 65 of the TNGST Act, 2017, were addressed appropriately in the assessment order.

ISSUE-WISE DETAILED ANALYSIS

1. Non-application of mind to the petitioner's objections

Relevant Legal Framework and Precedents: The principle of non-application of mind is a fundamental aspect of administrative law, requiring that authorities must consider all relevant materials and submissions before making a decision.
Court's Interpretation and Reasoning: The Court found that the impugned order did not reference the petitioner's replies to the show cause notice, indicating a lack of consideration of the submitted objections.
Key Evidence and Findings: The petitioner had submitted multiple replies to the notice, which were not addressed in the assessment order.
Application of Law to Facts: The Court applied the principle of non-application of mind to the facts, determining that the absence of reference to the replies in the order demonstrated a failure to consider the material on record.
Treatment of Competing Arguments: The Respondent's counsel acknowledged the oversight and agreed to re-do the assessment considering the objections.
Conclusions: The Court concluded that the impugned order suffered from non-application of mind and required a reassessment.

2. Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents: The principles of natural justice mandate that parties must be given a fair opportunity to present their case, including the right to a personal hearing.
Court's Interpretation and Reasoning: The Court held that the lack of a personal hearing constituted a violation of natural justice principles.
Key Evidence and Findings: The petitioner was not afforded a personal hearing, despite submitting multiple replies to the show cause notice.
Application of Law to Facts: The Court applied the principles of natural justice to the facts, determining that the failure to provide a hearing was a procedural lapse.
Treatment of Competing Arguments: The Respondent's counsel agreed to provide a reasonable opportunity for a hearing in the reassessment process.
Conclusions: The Court concluded that the impugned order violated natural justice principles and directed a reassessment with a hearing opportunity.

3. Audit Defects and Assessment Order

Relevant Legal Framework and Precedents: Section 65 of the TNGST Act, 2017, governs the audit process and the identification of defects in tax filings.
Court's Interpretation and Reasoning: The Court noted that several defects identified during the audit were not properly addressed in the assessment order.
Key Evidence and Findings: The audit identified multiple defects, most of which were dropped in the subsequent assessment order, except for the issue of interest under Section 50.
Application of Law to Facts: The Court found that the assessment order failed to adequately address the audit findings, necessitating a reassessment.
Treatment of Competing Arguments: The Respondent agreed to re-evaluate the assessment considering the audit defects and the petitioner's objections.
Conclusions: The Court directed the Respondent to re-do the assessment, taking into account the audit defects and providing an opportunity for a hearing.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "The impugned order suffers from the vice of non-application of mind inasmuch as there is not even a reference to the replies referred above, in the impugned order of assessment."
Core Principles Established: The necessity of considering all relevant submissions and the importance of adhering to natural justice principles in administrative proceedings.
Final Determinations on Each Issue: The Court directed the Respondent to re-do the assessment, considering the petitioner's objections and providing a reasonable opportunity for a hearing, thereby addressing the identified procedural lapses.