2024 (6) TMI 1307 - HC - GST

Violation of principles of natural justice - non-receipt of either the SCN or the impugned order until the recovery notice was received - notice for personal hearing was returned by the postal authority with the remark no such person in the address - HELD THAT - The impugned order records expressly that the personal hearing notice was returned with the endorsement no such person in the address . The petitioner has placed on record the sale deed for purchase of a house on 07.11.2023. Upon such purchase, the petitioner asserts that he shifted to such address. In these facts and circumstances, it is just and necessary that an opportunity be provided to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 26.10.2022 is set aside subject to the condition that the petitioner remits a sum of Rs. 50,000/- towards the tax demand within a maximum period of three weeks from the date of receipt of a copy of this order - Petition disposed off.

Issues: Challenge of order on grounds of breach of natural justice, failure to receive notices, opportunity to contest tax demand, setting aside impugned order, conditions for remand, direction for fresh assessment order.

In this case, the petitioner, a painting contractor and Income Tax assessee, challenged an order dated 26.10.2022, alleging a breach of natural justice as he did not receive the show cause notice or the impugned order until a recovery notice was received at his new address in July 2023. The petitioner sought an opportunity to contest the tax demand on merits. The impugned order noted that the notice for personal hearing was returned as "no such person in the address." The petitioner provided evidence of purchasing a new house on 07.11.2023 and shifting to a new address, justifying the need for an opportunity to contest the tax demand. The court found it just and necessary to set aside the impugned order subject to the condition that the petitioner remits Rs. 50,000 towards the tax demand within three weeks and directed the respondent to serve the show cause notice within one week for the petitioner to reply within two weeks. The respondent was instructed to provide a reasonable opportunity for a personal hearing and issue a fresh assessment order within three months of receiving the petitioner's reply.

The learned counsel for the petitioner argued that the proposal in the impugned order related to labour charges paid for painting work, emphasizing the need for a chance to contest the tax demand on its merits. On the other hand, the senior standing counsel for the respondents highlighted that the petitioner's income tax return for the assessment year 2017-18 still contained the old address where notices were sent. The counsel also stressed the importance of protecting revenue interest, considering the issuance of the impugned order in October 2022. The court acknowledged the petitioner's evidence of purchasing a new house and shifting to a new address, leading to the decision to set aside the impugned order and provide the petitioner with an opportunity to contest the tax demand, subject to certain conditions.

The court's decision included setting aside the impugned order dated 26.10.2022 and directing the petitioner to remit Rs. 50,000 towards the tax demand within three weeks. The respondent was instructed to serve the show cause notice promptly, allowing the petitioner to reply within two weeks. Subsequently, the respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh assessment order within three months of receiving the petitioner's reply. The writ petition was disposed of based on these terms, with no costs incurred, and related motions were closed accordingly.

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