M/S.Anantham Retail Private Limited vs. State Tax Officer

Facts

The petitioner, M/s. Anantham Silks, filed multiple writ petitions challenging assessment orders dated January 31, 2022, issued by the State Tax Officer, Ramanathapuram Assessment Circle. These orders pertained to tax liabilities for the assessment years 2017-18, 2018-19, 2019-20, and 2020-21, with disputed amounts ranging from Rs. 55,34,996 to Rs. 7,89,66,496. The assessments stemmed from a surprise inspection conducted by the State Tax Department under Section 67 of the TNGST Act in September 2021, which revealed alleged irregularities. Following the inspection, the respondent issued communications in Form DRC-01A, to which the petitioner responded, disputing the liabilities and quantification. Despite the petitioner's objections and a personal hearing, the respondent proceeded to pass the impugned assessment orders.

Held

The Court held that the assessment orders were passed in violation of the principles of natural justice. Specifically, it found that after the issuance of notice in Form DRC-01A and the petitioner's objections, a show cause notice under Section 74(1) of the TNGST Act ought to have been issued. The Court noted that the respondent failed to follow this procedure, which includes giving an opportunity to file objections and conducting a personal hearing before finalizing the assessment. Furthermore, the Court found the subsequent recovery notice issued to the bank under Section 79 of the TNGST Act to be improper. Consequently, the Court quashed the assessment orders and the consequential recovery notice. The respondent was directed to issue a fresh notice, follow the prescribed procedures under the TNGST Act, issue a show cause notice, provide an opportunity for objections, and then pass appropriate orders on merits and in accordance with law expeditiously.

Key Issues

1. Whether the assessment orders passed by the respondent are in violation of the principles of natural justice, specifically concerning the issuance of a show cause notice under Section 73 or 74 of the TNGST/CGST Act before finalizing the assessment. Petitioner's arguments: The petitioner contended that the assessment orders were passed in violation of the principles of natural justice as no proper show cause notice, as envisaged under Section 73 or 74 of the TNGST/CGST Act, was issued before passing the final orders. They argued that the proceedings were perverse, and information collected was unreliable. The petitioner also argued that the respondent failed to consider their serious objections and that the issuance of a recovery notice to the bank before the finalization of assessment was improper. Respondent's arguments: The respondent argued that the inspection was conducted, notices were served, and personal hearings were provided. They contended that the petitioner failed to provide convincing objections with supporting documents. The respondent asserted that the notices were issued in accordance with the Act and Rules, and the assessment orders were passed legally, without deviating from natural justice. They maintained that the petitioner had the remedy of appeal under Section 107(1) of the TNGST Act.