2025 (1) TMI 406 - HC - GST

Challenge to impugned order passed by the respondent relating to the assessment year 2019-20 - petitioner would submit that they would pay the balance remaining out of the 25% after deducting the monies which is stated to have been paid - HELD THAT - On complying with the above conditions, the impugned order of assessment shall be treated as show cause notice and the petitioner shall file their objections within a period of four weeks from the date of receipt of a copy of this order. The impugned order passed by the respondent dated 30.08.2024 is hereby set aside - Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily considers the following legal issues:

• Whether the impugned order dated 30.08.2024, relating to the assessment year 2019-20, was validly issued by the respondent authority.
• Whether the petitioner was duly notified of the proceedings and given a fair opportunity to present their case.
• Whether the petitioner is entitled to a further opportunity to contest the discrepancies identified during the audit inspection.
• Whether the penalties imposed for non-compliance with GST procedural requirements, such as non-generation of outward E-way bills, were justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Impugned Order

• Relevant Legal Framework and Precedents: The assessment and imposition of penalties under the Goods and Services Act, 2017, particularly concerning procedural compliance.
• Court's Interpretation and Reasoning: The court examined whether the procedural requirements for notifying the petitioner were met, particularly in light of the petitioner's claim of not receiving physical notices.
• Key Evidence and Findings: The petitioner argued that notices were not served via Registered Post Acknowledgement Due (RPAD) but were uploaded on the GST Portal, which allegedly led to their unawareness of the proceedings.
• Application of Law to Facts: The court considered the method of notice delivery and its adequacy under the GST framework, emphasizing the need for effective communication of such notices.
• Treatment of Competing Arguments: The petitioner sought a chance to address discrepancies, while the respondent maintained that procedural norms were followed.
• Conclusions: The court found that the petitioner was not given a fair opportunity to contest the discrepancies due to inadequate notice delivery.

Issue 2: Notification and Opportunity to Present Case

• Relevant Legal Framework and Precedents: Principles of natural justice, requiring fair hearing opportunities before imposing penalties.
• Court's Interpretation and Reasoning: The court underscored the importance of providing the petitioner with a reasonable opportunity to respond to allegations before finalizing penalties.
• Key Evidence and Findings: The petitioner claimed ignorance of the proceedings due to the manner of notice delivery, which the court deemed insufficient for ensuring awareness.
• Application of Law to Facts: The court considered whether the petitioner was effectively precluded from participating in the process due to the notification method.
• Treatment of Competing Arguments: The court balanced the petitioner's right to a fair hearing with the respondent's procedural adherence.
• Conclusions: The court concluded that the petitioner should be granted another opportunity to contest the discrepancies.

Issue 3: Justification of Penalties

• Relevant Legal Framework and Precedents: GST provisions regarding penalties for non-compliance, including non-generation of E-way bills.
• Court's Interpretation and Reasoning: The court assessed whether the penalties were proportionate to the alleged non-compliance, particularly given the petitioner's partial compliance and willingness to settle dues.
• Key Evidence and Findings: The petitioner had paid the tax and penalty for some discrepancies but contested the penalty for non-generation of E-way bills.
• Application of Law to Facts: The court evaluated the appropriateness of penalties in light of the petitioner's actions post-inspection.
• Treatment of Competing Arguments: The petitioner argued for leniency due to partial compliance, while the respondent upheld the penalties.
• Conclusions: The court set aside the impugned order, allowing the petitioner to present objections and potentially mitigate penalties.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The impugned order passed by the respondent dated 30.08.2024 is hereby set aside and this Court is inclined to pass the following orders..."
• Core Principles Established: The judgment reinforces the necessity of adhering to principles of natural justice, particularly the right to be heard and adequately notified of proceedings.
• Final Determinations on Each Issue: The court set aside the impugned order, allowing the petitioner to deposit 25% of disputed taxes and file objections, with the respondent directed to verify compliance and provide a hearing opportunity.

The court's decision emphasizes the importance of fair procedural practices in tax assessments and the need for effective communication of notices to ensure taxpayers can adequately defend themselves against allegations of non-compliance.