Uthirapathi Contractor vs. The State Tax Officer (Inspection-I)

Facts

The petitioner, Tvl. Uthirapathi Contractor, represented by its Proprietor P. Uthirapathi, filed a writ petition challenging an order passed by the Respondent, The State Tax Officer (Inspection-I), for the tax period 2021-22, dated 05.09.2024. The petitioner sought to quash this order, alleging it was illegal and passed in gross violation of the principles of natural justice. The petitioner also requested a direction for the Respondent to re-do the assessment afresh after providing an opportunity for a personal hearing. The Respondent's counsel submitted that the petitioner had paid the tax amount pursuant to a DRC-01 notice, and the present show cause notice was issued only for the collection of interest and penalty.

Held

The Court held that the impugned assessment order was to be set aside. The reasoning was based on the fact that the issue raised in the writ petition was covered by a previous order of the same Court in a batch of writ petitions (W.P.(MD) No.26481 of 2024 etc., dated 06.01.2025). The Court directed the petitioner to submit a reply within two weeks of receiving the order. Subsequently, the Respondent was directed to provide an opportunity of hearing to the petitioner and pass orders on merits and in accordance with law. The Court also ordered that any bank attachment made in connection with the impugned order would stand raised. The ratio decidendi is that principles of natural justice, particularly the right to a hearing, must be adhered to before passing an assessment order, and if such an opportunity is denied, the order is liable to be set aside and the matter remanded for fresh consideration.

Key Issues

1. Whether the impugned order dated 05.09.2024, passed by the Respondent for the tax period 2021-22, is illegal and in gross violation of the principles of natural justice, warranting its quashment? Petitioner's contention: The petitioner argued that the impugned order was passed in gross violation of the principles of natural justice, specifically by denying an opportunity for a personal hearing. The petitioner sought to quash the order and have the assessment redone with a proper hearing. Respondent's contention: The Respondent's counsel submitted that the petitioner had already paid the tax amount as per the DRC-01 notice, and the subsequent show cause notice was only for interest and penalty. The Respondent did not explicitly argue against the petitioner's claim of violation of natural justice but indicated the nature of the remaining demand.