2024 (9) TMI 1684 - HC - GST

Violation of principles of natural justice - Opportunity of hearing not granted adequately before passing orders - no adjournments were granted to the petitioner u/s 75 of the CGST Act 2017 - requirement of previous authorization from the competent authority u/s 67 of the CGST Act 2017 - HELD THAT - Section-67 of the CGST Act 2017 requires previous authorization from the competent authority before any officer of the tax department can inspect the premises of the dealer or conduct an audit of the accounts of a dealer. In the present case such previous authorization had already been given on 05.11.2019. The relevant provision would be Section-63 of the CGST Act 2017 which regulates the assessment of un-registered persons - This provision authorizes the appropriate officer to assess the tax liability of any taxable person who has not obtained registration even though he is liable to obtain such registration. The language in Section-63 of the CGST Act 2017 does not provide for any prior authorization being necessary where the assessment has been done by the proper officer. The term proper officer is defined in Section-2 (91) of the CGST Act 2017 to mean an officer to whom any function to be performed under this Act is assigned by the Commissioner. The territorial limit of each assessing officer is assigned by the Commissioner - the 1st respondent being Assistant Commissioner (ST) Addanki Circle was the appropriate assessing authority and as the territorial assessing authority did not require any authorization under Section-63 of the CGST Act 2017. Section 75(4) of the CGST Act 2017 requires an opportunity of hearing to be given if the assessing officer contemplates an adverse decision even if the person does not make any request for such hearing. The show-cause notice dated 17.12.2019 only provides for filing written objections and no personal hearing has been granted. In the circumstances the said assessment order would have to be set aside leaving it open to the respondents to grant such a personal hearing and to pass orders thereafter - it would not be necessary for this Court to go into the question of whether a DIN number is needed on every order or not. These Writ Petitions are disposed of setting aside the assessment order dated 21.09.2020 as well as the penalty order dated 09.11.2020 impugned in the present Writ Petitions while leaving it open to the 1st respondent to undertake a fresh assessment proceeding and consequential proceeding if any after giving an opportunity of personal hearing to the petitioner.

Summary

Issues:
Challenge to assessment order and penalty order based on lack of adequate opportunity of hearing, requirement of three adjournments before passing orders, authorization for inspection and assessment proceedings, absence of DIN numbers on orders.

Analysis:
1. The petitioner challenged the assessment order and penalty order in two writ petitions, alleging inadequate opportunity of hearing and lack of adjournments as required by Section-75 of the CGST Act, 2017.

2. The petitioner argued that the inspecting officer did not have proper authorization under Section-67 of the CGST Act, 2017 to conduct assessment proceedings. The petitioner contended that the assessing officer should have obtained authorization before passing the assessment order.

3. The petitioner further raised a new ground regarding the absence of Document Identification Number (DIN) on the orders, citing a previous judgment. The petitioner argued that the absence of DIN numbers rendered the orders invalid.

4. The Government Pleader countered the petitioner's contentions by explaining that Section-75 of the CGST Act, 2017 does not mandate three adjournments before passing orders, only limits the number of adjournments. The Pleader also clarified the requirements of authorization under Section-67 and the necessity of DIN numbers on orders for authentication purposes.

5. The Court examined the provisions of Section-67 and Section-63 of the CGST Act, 2017 concerning authorization for inspection and assessment of unregistered persons. The Court found that the assessing officer had proper territorial jurisdiction and did not require additional authorization for assessment.

6. Regarding the issue of adjournments, the Court noted that while Section-75 allows for adjournments, the petitioner did not seek further adjournments after the initial request. However, the Court emphasized the necessity of granting a personal hearing if an adverse decision is contemplated, which was lacking in this case.

7. Consequently, the Court set aside the assessment and penalty orders, directing the respondents to conduct a fresh assessment proceeding after providing the petitioner with a personal hearing. The Court did not delve into the requirement of DIN numbers on orders due to the decision to set aside the orders.

8. The Writ Petitions were disposed of without costs, with directions for a fresh assessment proceeding and personal hearing for the petitioner.