M/S. Sri Sai Ganga Educational Academy vs. Assistant Commissioner (St)

Held

The Court held that the impugned assessment order was indeed passed on grounds not mentioned in the show cause notice, rendering it liable to be set aside. The reasoning was based on the petitioner's specific contention, supported by the judgment in Sumo Foods Private Limited, Hyderabad, which established that an assessment order cannot be based on grounds not communicated to the assessee in the show cause notice. The Court found merit in the revenue's submission that the matter could be remanded. Therefore, the Court directed that the impugned assessment order be treated as a show cause notice. The first respondent was ordered to return the seized books and records to the petitioner within two weeks. The petitioner was then to file detailed objections within three weeks of receiving the records. Subsequently, the first respondent was to pass fresh orders after affording a personal hearing to the petitioner, strictly in accordance with the procedure established by law, within two months from the expiry of the stipulated timeframes for objections.

Facts

The petitioner, an educational society providing coaching for TET and DSC exams, is challenging an assessment order dated May 20, 2019, passed by the first respondent for the tax period July 2017 to June 2018. The first respondent, authorized by the Joint Commissioner of State Tax, inspected the petitioner's premises on June 28, 2018, and seized records. A show cause notice was issued on August 1, 2018, proposing tax under CGST and SGST Acts based on turnover derived from prospective students' application forms. The petitioner filed objections on February 4, 19, and 22, 2019, disputing the turnover calculation. The impugned assessment order confirmed the turnover proposed in the show cause notice.

Key Issues

1. Whether the impugned assessment order, passed on grounds not mentioned in the show cause notice, is arbitrary, capricious, erroneous, violative of the principles of natural justice, contrary to law, facts, and illegal, thereby warranting setting aside under Article 226 of the Constitution of India? Petitioner's contention: The petitioner argued that the impugned assessment order was passed based on grounds and figures not included in the show cause notice. They specifically pointed to paragraph 8 of the assessment order, which contained a table of figures forming the basis of the assessment, contending that these were not part of the original show cause notice. Reliance was placed on the decision in Sumo Foods Private Limited, Hyderabad v. Commercial Tax Officer, Rajendra Nagar Circle, Hyderabad. Revenue's contention: The learned standing counsel for Commercial Taxes submitted that the impugned assessment order could be treated as a show cause notice, and the first respondent could be directed to pass fresh orders after affording the petitioner an opportunity to submit detailed objections, following the return of seized books and records.