2025 (3) TMI 1391 - HC - GST

Violation of principles of natural justice - Challenge to assessment order and the consequent rectification order passed by the respondent - petitioner s consultant failed to file an appeal within the limitation period - HELD THAT - In the present case initially ASMT 10 notice dated 04.01.2022 was issued to the petitioner for which the petitioner submitted its reply on 07.04.2022. Thereafter for the very same issue and assessment year another ASMT 10 notice was issued on 09.10.2023. Thereafter pre show cause notice dated 11.12.2023 followed by show cause notice dated 16.12.2023 was issued to the petitioner for which the petitioner vide reply dated 16.01.2024 and 28.02.2024 sought for adjournment for filing detailed reply along with supporting documents and also personal hearing. But the respondent herein without considering the same has passed the impugned assessment order. As rightly contended by the learned counsel for the petitioner when the respondent intend to drop the proceedings based on the reply filed by the petitioner to the show cause notice they can very well do so. But when they intend to pass orders confirming the demand for the other issue they ought to have provided an opportunity of hearing to the petitioner. In the case on hand the impugned order came to be passed without sufficient opportunities to the petitioner. Hence this Court is of the view that the impugned order passed is in violation of principles of natural justice and it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. In such view of the matter this Court is inclined to set aside the impugned assessment order as well as the rectification order passed by the respondent. The orders impugned herein are set aside and the matter is remitted back to the assessing authority for fresh consideration - Petition allowed by way of remand.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the assessment order dated 26.04.2024 and the subsequent rectification order dated 15.02.2025 were passed in violation of the principles of natural justice.
Whether the petitioner was denied an opportunity for a personal hearing before the impugned orders were passed.
Whether the matter should be remanded back to the assessing authority for fresh consideration with an opportunity for the petitioner to present their case.

ISSUE-WISE DETAILED ANALYSIS

Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents: The principles of natural justice require that a party affected by a decision must be given a fair opportunity to present their case. This includes the right to a personal hearing before any adverse order is passed.
Court's Interpretation and Reasoning: The Court noted that the impugned assessment order was passed without granting the petitioner a personal hearing, despite their request for the same. The Court emphasized that failure to provide a personal hearing constitutes a violation of natural justice principles.
Key Evidence and Findings: The petitioner had submitted replies to the ASMT 10 notices and requested adjournments for filing a detailed reply and for a personal hearing. However, the respondent proceeded to pass the assessment order without considering these requests.
Application of Law to Facts: The Court applied the principles of natural justice to the facts of the case, concluding that the respondent's actions deprived the petitioner of a fair opportunity to present their case.
Treatment of Competing Arguments: The respondent argued that one issue was dropped based on the petitioner's reply, and the other issue was confirmed. However, the Court found that the confirmation of the second issue without a hearing was procedurally unfair.
Conclusions: The Court concluded that the assessment order and rectification order were passed in violation of natural justice principles and should be set aside.

Remand for Fresh Consideration

Relevant Legal Framework and Precedents: When an order is set aside due to procedural unfairness, the matter is often remanded for fresh consideration with instructions to follow due process.
Court's Interpretation and Reasoning: The Court determined that the matter should be remanded to the assessing authority to allow the petitioner to present their case with a personal hearing.
Key Evidence and Findings: The petitioner expressed willingness to pay Rs.5,00,000/- as a condition for remand, which was not objected to by the respondent.
Application of Law to Facts: The Court applied the principles of fairness and due process, ordering the remand on the condition of payment by the petitioner.
Treatment of Competing Arguments: The respondent's proposal for remand upon payment of 25% of the disputed tax was modified by the Court to a fixed sum of Rs.5,00,000/-.
Conclusions: The Court ordered the remand for fresh consideration with specific instructions for compliance by both parties.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Violation of principles of natural justice is a failure of due process. If any order is passed against the petitioner with demand, that order has to be passed after giving an opportunity of personal hearing to the petitioner otherwise, it will amount to depriving the interest of the petitioner and the same amounts to violation of principles of natural justice."
Core Principles Established: The necessity of providing a personal hearing in tax assessment proceedings where adverse orders are contemplated, to uphold the principles of natural justice.
Final Determinations on Each Issue: The impugned assessment and rectification orders were set aside, and the matter was remanded to the assessing authority for fresh consideration. The petitioner was required to pay Rs.5,00,000/- as a condition for remand, and the respondent was instructed to provide a personal hearing before passing any new orders.