"The impugned order passed U/s 62 Without issue of Notice U/s.46 (DRC-3A) liable to set aside"
Hon'ble Jharkhand High Court in the case of Vinman Constructions Limited ... vs The State Of Jharkhand Civil-157 on 22 February, 2022 ,
The impugned assessment order passed under section 62 of the Act by the Respondent No. 2 suffers from a serious lacuna due to non-issuance of notice under section 46 of the Act. The action of the Respondent had led to blocking of ITC to the tune of Rs. 2.88 crores which has been adjusted against the disputed tax liability of Rs. 3,30,76,800/- imposed under the impugned assessment order. From perusal of the appellate order at Annexure-9, it appears that the Appellate Authority has only taken into consideration that the petitioner had failed to file its return within thirty days of the assessment order in terms of section 62(2) of the Act and therefore, the assessment order passed by the proper officer to the best of his judgment did not require any interference. Learned Appellate Authority has however failed to take note that the assessment order itself suffers from serious infirmities for non-compliance of principles of natural justice and procedural requirement prescribed under the Act in the absence of proper notice upon the petitioner. The impugned action has led to serious penal consequences which cannot be sustained in view of serious infirmities in the procedure adopted by the Assessing Officer. This Court is, therefore, of the view that the impugned assessment order dated 02.08.2018 passed by the Respondent No. 2 (Annexure-6)as also the Summary of the Order contained in DRC-07 dated 01.10.2018 issued by the Respondent No. 3 deserves to be set aside. Accordingly, they are set aside. For the reasons recorded hereinabove, the appellate order dated 25.01.2020 (Annexure-9) passed by the Joint Commissioner of State Tax (Appeal), Ranchi Division, Ranchi also cannot be sustained in the eye of law. Accordingly, it is set aside. Consequently, ITC of the petitioner amounting to Rs. 2.88 crores lying blocked shall be unblocked.
As also admitted by the Respondent, petitioner has filed its return for the period in question. It is open for the Respondent to accept the return or undertake proper scrutiny thereof as per law. Learned counsel for the petitioner submits that pre-deposit made before the Appellate Authority may be directed to be released. It is up to the petitioner to approach the Appellate Authority with proper request, which shall be considered in accordance with law.
Posted on: 25/08/2022
Assessment Order is void when the Notice is not served by the GST Department - Hon'ble Madras High Court
The Hon’ble Madras High Court (Madurai Bench) in the case of M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. v. Assistant Commissioner, Tuticorin [W.P. (MD) 6874 of 2023 dated August 29, 2023] allowed the writ petition and held that an assessment order could not be passed without serving notice as per the conditions stipulated in Section 169(1)(b) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Facts:
M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. (“the Petitioner”) operates three business verticals on the same PAN. The Revenue Department (“the Respondent”) passed the order dated August 17, 2022, (“the Impugned Order”) of the CGST Act raising demand against the Petitioner vide GST DRC-07 dated August 17, 2022.
Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble Madras High Court (Madurai Bench) for setting aside the Impugned Order and directing the Respondent to re-do the assessment. It was submitted that the Impugned Order was passed without considering the Annual Returns in GSTR-9 and the Audit Statement filed in GSTR-9C. No opportunity has been granted to the Petitioner to submit the required documents. It was further submitted that, no physical notice/order was served under Section 169(1)(b) of the CGST Act, and no opportunity was granted to the Petitioner to appear before the Respondent, therefore the Impugned Order passed, violates the principle of natural justice.
Issue:
Whether the assessment order could be passed without serving notice as per conditions stipulated in Section 169(1)(b) of the CGST Act?
Held:
The Hon’ble Madras High Court (Madras Bench) in W.P. (MD) 6874 of 2023 held as under:
Opined that, the Impugned Order is passed without serving notice under Section 169(1)(b) of the CGST Act and without considering the fact that the Petitioner has three business verticals.
Held that, the Impugned Order is quashed, hence Writ Petition is allowed.
Directed that, the Respondent shall grant opportunity for personal hearing to the Petitioner and Petitioner shall produce the evidence and required documents. Thereafter, the Respondent officers shall pass the required orders.
Further Directed that, the Respondent shall complete the assessment proceedings within eight weeks from the date of receipt of the order of the Court.
Posted on: 03/11/2023
ASMT 10 is mandatory before proceeding to issue GST DRC-01 and failure to issue the same in respect of the discrepancies forming the subject matter in GST DRC-01 culminating in GST DRC-07 would vitiate the entire proceedings. - Hon'ble Madras High Court
The Hon’ble High Court of Madras vide its order dated 27.09.2022 in the matter of M/s Vadivel Pyrotech Private Limited Vs. The Assistant Commissioner (ST), Circle – II, Commercial Tax Department, NGO Colony, Satchiyapuram, Sivakasi West in W.P.(MD)No.22642 of 2022 and W.M.P.(MD)Nos.16803 and 16804 of 2022, set aside the order passed in FORM DRC 07 pursuant to issuance of summary of show cause notice in FORM DRC 01, where the GST ASMT 10 was not issued after the scrutiny of returns on the issues, on which later on the aforesaid DRC 01 and DRC 07 was issued.
The Petitioner filed the writ petition before the Hon’ble High Court challenging the order in Ref.No:33AADCV5898H1ZV dated 09.05.2022 passed by the Respondent in gross violation of principles of natural justice and the procedure prescribed under the Tamil Nadu Goods and Service Tax Act, 2017.
Facts of the Case: –
The petitioner is engaged in the business of manufacture and supply of pyrotechnic products (fireworks) and is registered under the TNGST Act. The petitioner had duly filed its returns under the GST periodically discharging appropriate taxes, while availing the Input Tax Credit in terms of Section 16 of the TNGST Act.
That a Scrutiny of GST returns was undertaken by the Respondent in terms of Section 61 of the TNGST Act and a notice in Form ASMT 10 dated22.12.2021 was issued pointing out certain discrepancies between GSTR3B, GSTR 1 and GSTR 2A returns filed by the petitioner for the year 2018-19 calling upon the petitioner to pay taxes to the extent of Rs.13,54,250/- along with interest.
That the petitioner in response paid the interest and furnished GST DRC – 03 dated 27.12.2021, while submitting its explanation in Form ASMT 11 on 18.01.2022, with other relevant details.
After more than Six months, the petitioner was enquired over telephone by the office of the Respondent as to whether the petitioner had paid taxes, interest and penalty demanded vide order dated 09.05.2022.
However, the petitioner was unaware of any proceedings other than the Scrutiny under Section 61 of the Act resulting in the issuance of Form ASMT 10 dated 22.12.2021, which was duly responded to by the petitioner in Form ASMT 11 dated 18.01.2022.
Thereafter, on enquiring about the same from the office of the Respondent on 12.08.2022, it came to the knowledge of the petitioner that an order dated 09.05.2022 was passed in pursuance to a Summary of Notice in DRC 01 and also been uploaded in the GST portal.
On getting the information, the petitioner logged in to the GST portal and found that the Notice and Order had in fact been uploaded, thereafter, GST DRC-01 and GST DRC-07 was downloaded by the petitioner.
Further on perusal of DRC -01 & DRC -07, it was found by the petitioner that pursuant to the alleged Scrutiny of returns, six defects were noticed, which were different from the defects/discrepancy which were pointed out in the Form ASMT 10 issued on 22.12.2021.
Petitioner’s Submissions: –
It was submitted on the behalf of the petitioner that the entire proceedings have been made behind their back and they were completely unaware of either the summary of the Notice in GST DRC-01 or the Order in GST DRC-07 until being informed by the Respondent.
It was submitted that the entire proceedings stand vitiated for violation of principles of natural justice as neither the show cause notice nor the orders under GST DRC-07 passed under Section 74 of the Act was served on the petitioner.
Reliance was placed on the decision of the Hon’ble Court in W.P.No.27651 of 2021 to submit that it has been suggested by this Court that though Section 169 prescribes different modes for service of orders, summons, notice etc., in view of the technical difficulties in implementing GST, unless the technical issues are resolved, a physical copy through registered post or speed post or courier with acknowledgement may be followed for service of orders, summons, notices etc.
Further it was submitted that the impugned proceeding is in gross violation of the procedure contemplated under Rule 99 of the Tamil Nadu Goods and Service Tax Rules, which prescribes the method and the manner for verification of the correctness of the returns and to correct any discrepancy that may be noticed or to initiate appropriate proceedings under Sections 65, 66, 67, 73 or 74 of the GST Act pursuant to a Scrutiny under Section 61 of the Act.
On the other hand, it was admitted on the behalf of the respondent that form ASMT 10 was not issued other than the one issued on 22.12.2021, which does not cover the issue raised in the impugned proceeding. Therefore, sought leave to issue notice in Form ASMT 10 in respect of the aspects forming the subject matter of the impugned proceedings and thereafter to assess in compliance with the procedure contemplated under the Act including Section 61.
Held: –
The Hon’ble Court after considering the submissions made, facts of the case and the law applicable, found that it is evident from the preamble of the Show Cause Notice in GST DRC 01 that the impugned order has been passed pursuant to the Scrutiny of GST returns filed by the petitioner under Section 61 of the TNGST Act, 2017.
The Hon’ble Court taking note, and on cumulative reading of the law stated in Section 61, 74 and Rule 100(2), found that ‘The proper officer may scrutinize returns and related particulars and in case any discrepancies are noticed, the same shall be informed in ASMT 10 seeking explanation from the taxable person (which in the present case was issued on 22.12.2021). If the explanation offered by the petitioner in ASMT 11 is acceptable, no further action shall be taken (which in the present case was submitted by the petitioner in response to ASMT dated 22.12.2021). Further it the explanation is not satisfactory, the proper officer may proceed to initiate appropriate action under Section 65, 66, 67, 73 or 74 of the Act and thereafter, the proper officer shall proceed to pass an order in GST DRC 07 under Section 73 and 74 after issuing GST DRC-01A in terms of Rule 142 (1A) and GST DRC-01. It is thus clear that any proceeding in GST DRC-01A/1 culminating in an Order in GST DRC-07, if pursuant to Scrutiny under Section 61 of the TNGST Act, ought to be preceded by issuance of Form ASMT 10.’
That in the present case though ASMT 10 was issued on 22.12.2021 pointing out certain discrepancies, the GST DRC-01 dated 15.02.2022 and the impugned order in GST DRC-07 dated 09.05.2022 are made on the basis of issues that are completely different from what was set out in Form ASMT 10 dated 22.12.2021.
Therefore, it was held by the Hon’ble Court that ASMT 10 is mandatory before proceeding to issue GST DRC-01 and failure to issue the same in respect of the discrepancies forming the subject matter in GST DRC-01 dated 15.02.2022 culminating in GST DRC-07 dated 09.05.2022 would vitiate the entire proceedings.
The Hon’ble Court with the above findings, disposed of the writ petition by setting aside the impugned order dated 09.05.2022 and remitted the matter back to the Assessing Officer for carrying on the assessment once again. Further It is open to the Respondent to issue appropriate Form (Form ASMT 10) and after affording a reasonable opportunity to the petitioner in the manner contemplated under the Act proceed further in accordance with law. The petitioner shall also co-operate in the proceedings.
Posted on: 24/01/2024
Clubbing of Show Cause Notices (SCNs) for multiple Assessment Years, asserting a violation of Section 73 of the CGST Act.- Hon'ble Madras High Court
The Hon’ble High Court of Madras vide its order dated 18.12.2023 in the matter of M/s Titan Company Ltd vs Joint Commissioner of GST & Central Excise in Salem and the Additional Commissioner of GST & Central Excise, Office of the Commissioner of GST & Central Excise (Audit), Coimbatore. In the said matter the Revenue Department (Respondent) had issued bunching of SCN(s) dated 28.09.2023 for five Assessment Years starting from 2017-18 to 2021-22.
The Hon’ble Court vide its order dated 18.12.2023, held that the contention of the Revenue Department that there is no time limit contemplated under Section 73 of the Act is not correct. Section 73(10) of the Act specifically provides a time limit of three years from the due date for furnishing of annual return for the financial year to which the tax due relates to. In the present case, notice was issued under Section 73 of the Act for determination of the tax and therefore, the limitation period of three years as prescribed under Section 73(10) would be applicable.
Further, by issuing bunching of show cause notices for five Assessment Years starting from 2017-18 to 2021-22, the respondents are trying to do certain things indirectly which they are not permitted to do directly and the same is not permissible in law. If the law states that a particular action has to be completed within a particular year, the same has to be carried out accordingly. The limitation period of three years would be separately applicable for every assessment year and it would vary from one assessment year to another. It is not that it would be carried over or that the limitation would be continuing in nature and the same can be clubbed. The limitation period of three years ends from the date of furnishing of the annual return for the particular financial year. Therefore, issuing bunching of show cause notices is against the spirit of provisions of Section 73 of the Act and the Constitution Bench of the Hon’ble Apex Court in the decision reported in AIR 1966 SC 1350, State of Jammu and Kashmir and Others v. Caltex (India) Ltd has held that where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said law was laid down keeping in mind that each and every Assessment Year will have a separate period of limitation and the limitation will start independently and that is the reason why the Hon’ble Supreme Court has held that each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said principle would apply to the present case as well.
Conclusion: The Madras High Court’s ruling serves as a precedent, establishing the legal framework for challenging the bunching of Show Cause Notices under Section 73 of the CGST Act. The court’s interpretation reinforces the importance of adhering to specific time limits for each Assessment Year and upholds the principle that assessments spanning multiple years can be dissected, ensuring fair and lawful taxation practices. This case marks a significant step in preserving taxpayers’ rights and maintaining the integrity of the GST legal system.
Posted on: 24/01/2024
Assessment Order not sustainable when no reasonable opportunity is granted for proper representation and filing of reply -Hon'ble Madras High Court
The Hon’ble Madras High Court in the case of Tvl. Shanthi Vijay Granites v. Assistant Commissioner (ST), Hosur [W.P. No. 615 of 2021 dated October 31, 2023] disposed of the writ petition, and set aside the Assessment Order on the ground that adequate opportunity for representation and filing of reply was not granted to the Assessee by the Revenue Department.
Facts:
Tvl. Shanthi Vijay Granites (“the Petitioner”)filed a writ petition challenging the order dated March 19, 2020, issued by the Revenue Department (“the Respondent”) within two days of issuance of Form GST DRC-01. Also, the assessment order in Form ASMT-07 was issued on the same day of issuance of Form GST DRC-01. The Petitioner contended that no adequate opportunity has been provided to the Petitioner for responding to the Notices issued.
Issue:
Whether Assessment Order is sustainable when no reasonable opportunity is granted for proper representation and filing of reply?
Held:
The Hon’ble Madras High Court in W.P. No. 615 of 2021 held as under:
Observed that, there is no restriction on exercising power under Article 226 of the Constitution of India, even if alternate remedy exists, in cases where there is violation of principles of natural justice or lack of jurisdiction or error apparent on the face of record.
Noted that, the Form GST DRC-01 is not supported by the Annexure to Show Cause Notice (“the SCN”), therefore, the Petitioner was not provided with the necessary particulars to respond. Also, the Assessment Order in Form ASMT-07 and the SCN were issued on the same day.
Opined that, the Impugned Order was issued without any opportunity.
Further Opined that, when Impugned Order is issued within forty-eight hours of issuance of the SCN, the opportunity to respond was merely illusory, therefore, the proceedings are vitiated, thus, the writ petition is disposed of.
Held that, the Impugned Order is set aside.
Clarified that, the Respondent is entitled to do re-assessment subject to the condition that the Petitioner is granted reasonable opportunity in accordance with law
Posted on: 03/03/2024
Order liable to be set aside when no reasonable opportunity to submit reply is provided to Assessee after issuance of SCN - Hon'ble Madras High Court
The Hon’ble Madras High Court in Brakes India (P.) Ltd. v. Assistant Commissioner (ST) [W.P. No. 36439 of 2023 dated January 3, 2024] allowed the writ petition, thereby setting aside the Impugned Order in case where no reasonable opportunity is provided to the Assessee to submit a reply after issuance of Show Cause Notice (“SCN”) as the SCN is received via Email on the same day of the personal hearing.
Facts:
Revenue Department (“the Respondent”)issued a notice dated February 14, 2023, to Brakes India (P) Ltd. (“the Petitioner”) for proposing to block Input Tax Credit (“ITC”) under Rule 86A of the Central Goods and Services Rules, 2017 (“the CGST Rules”) pertaining to the purchases from the supplier claimed to be non-existent for which reply was filed by the Petitioner. Thereafter, the Petitioner was issued a Show Cause Notice dated October 9, 2023 which was received by the Petitioner via Email dated October 25, 2023. Subsequently, the Order dated October 30, 2023 (“the Impugned Order”) was issued against the Petitioner wherein the Petitioner was directed by the Respondent to reverse the ITC.
Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble High Court contending that, as per the SCN issued, the date fixed for personal hearing was the same date on which SCN was received by the Petitioner via Email.
Issue:
Whether Impugned Order is liable to be set aside when the SCN is received via Email on the same day of the personal hearing?
Held:
The Hon’ble Madras High Court in W.P.(C) No. 36439 of 2022 held as under:
Opined that, as per the facts of the case, no reasonable opportunity was provided to the Petitioner to submit the necessary documents and provide necessary explanation to the Respondent
Further Opined that, without expressing any opinion on the merits in the present matter, the Impugned Order requires interference.
Held that, the Impugned Order is quashed, Hence, writ petition is allowed.
Directed that, the Respondent Authorities should provide reasonable opportunity to the Petitioner, including a personal hearing and dispose the matter accordingly.
Posted on: 05/03/2024
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