2023 (2) TMI 323 - HC - GST

Violation of principles of natural justice - Validity of assessment order - non-application of mind - no personal hearing was afforded to the petitioner before passing of the impugned Assessment Order - input tax credit has been reversed by the petitioner himself - non-response to SCN due to medical ailments - HELD THAT - Admittedly, the show cause notice was issued only during the time when the petitioner was suffering from health ailments. The petitioner did not respond to the show cause notice dated 15.12.2021. Clause 4 of Circular No.1/2023-TNGST, dated 04.01.2023 states that proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfillment of the following conditions of Section 16 of TNGST Act in respect of the input tax credit availed on such invoices by the said registered person - As seen from the impugned Assessment Order, it is not clear as to whether Clause 4 of Circular No.1/2023-TNGST, dated 04.01.2023 was adhered to by the respondent before passing the impugned Assessment Order. Even though the Circular came in later point of time, the instructions given in the said Circular ought to have been adhered to by the respondent before passing the impugned Assessment Order and only then, it can be construed that the respondent has adhered to the principles of natural justice. This Court is of the considered view that the principles of natural justice has not been adhered to by the respondent and the impugned Assessment Order is also a non speaking order with regard to the Annual Return submitted by the petitioner for the Assessment year 2018-19. Hence, the impugned Assessment Order has to be quashed and the matter will have to be remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition disposed off.

Summary

Issues:
Challenge to Assessment Order under Tamil Nadu Goods and Services Tax Act, 2017 on grounds of violation of principles of natural justice.

Analysis:
The petitioner challenged the Assessment Order, contending that due to medical ailments, he couldn't respond to the show cause notice issued by the respondent. Medical certificates supported his claim of suffering from diabetes, Coronary Artery disease, and acute chest pain. The petitioner argued that the respondent erroneously concluded an input tax mismatch and excess input tax claim without verifying documents as per Section 16 of the TNGST Act, 2017. The petitioner also highlighted that the Annual Return for the year 2018-19 showed reversed input tax credit, indicating a lack of scrutiny by the respondent.

The petitioner emphasized the absence of a personal hearing before the Assessment Order was passed, alleging a violation of natural justice. Referring to a Circular by the Commercial Taxes Department, the petitioner argued that specific documents should have been scrutinized before the Assessment Order. The Court noted discrepancies in the Assessment Order, indicating a failure to adhere to the Circular's instructions, leading to a lack of compliance with natural justice principles.

The Court concluded that the Assessment Order lacked clarity on adherence to the Circular's requirements, highlighting a non-speaking order concerning the petitioner's Annual Return. Consequently, the Court quashed the Assessment Order and remanded the matter to the respondent for fresh consideration within twelve weeks. The respondent was directed to provide a personal hearing to the petitioner, adhere to natural justice principles, and strictly follow the Circular's instructions for a fair and lawful reconsideration of the case.

In summary, the Court found the respondent's Assessment Order to be deficient in procedural fairness and legal compliance, necessitating a fresh review with proper adherence to principles of natural justice and regulatory guidelines.