2024 (3) TMI 781 - HC - GST

Recovery notice - Validity of assessment orders pertaining to four assessment years - notices were not served in accordance with Section 169 of applicable GST statutes - violation of principles of natural justice - HELD THAT - On examining the show cause notice, it is evident that personal hearing was offered to the petitioner. In these circumstances, as a registered person, the explanation provided by the petitioner for not responding to these notices is not convincing. On examining the impugned assessment order, it is clear that the petitioner was not heard. It is also clear that the assessing officer relied on information available on a particular website on the internet to attribute values to materials used in construction. If the petitioner had been heard, the petitioner would have able to place relevant materials on record to endeavor to convince the assessing officer that the values estimated by him are incorrect. In these facts and circumstances, the impugned assessment orders warrant interference, albeit by putting the petitioner on terms. The impugned assessment orders are quashed subject to the condition that 10% of the disputed tax demand under each assessment order be adjusted against the credit available in the electronic credit ledger of the petitioner. The petitioner is also permitted to submit replies to the show cause notice within a maximum period of fifteen days from the date of receipt of a copy of this order. Petition disposed off.

Summary

Issues Involved:
Challenging assessment orders and recovery notice under GST statutes.

Assessment Orders Challenge:
The petitioner, a registered person in the construction business, challenged assessment orders for four years and a recovery notice in the fifth petition. The petitioner claimed Input Tax Credit (ITC) for goods purchased during the relevant periods, despite not engaging in construction activities. The primary challenge was the lack of proper service of notices as per Section 169 of GST statutes. The assessing officer relied on internet sources to attribute values to construction materials, which the petitioner argued was arbitrary and untenable.

Legal Grounds and Interference:
The impugned assessment orders referred to notices issued in May 2022, including a show cause notice with a personal hearing offer. However, it was noted that the petitioner was not heard during the assessment process. The assessing officer's reliance on internet information for valuing materials deprived the petitioner of the opportunity to present relevant evidence. Consequently, the court found that the assessment orders required interference, with the petitioner to be given a chance to respond and provide relevant materials.

Court Decision and Directions:
The court quashed the assessment orders with the condition that 10% of the disputed tax demand under each order be adjusted from the petitioner's electronic credit ledger. The petitioner was given fifteen days to respond to the show cause notice. Upon confirmation of the adjustment and after providing a reasonable opportunity for a personal hearing, fresh assessment orders were to be issued for each year. As a result of quashing the assessment order, the recovery notice was deemed invalid. The cases were disposed of with no costs incurred.