M.Sathees Kumar vs. The Deputy State Tax Officer - 2

Held

The Court held that the impugned order dated July 25, 2023, passed by the respondent was illegal and a gross violation of the principles of natural justice. The Court found that the petitioner had indeed submitted a reply on July 24, 2023, and the respondent's endorsement in the impugned order that no reply was filed was incorrect. Even though the petitioner had missed three personal hearings, the respondent was obligated to consider the reply submitted by the petitioner before passing the assessment order. The Court reasoned that failure to consider a reply submitted before the passing of an order, especially when it contradicts the basis of the order, violates the fundamental principles of natural justice. The ratio decidendi is that tax authorities must consider all submissions made by a taxpayer before passing an order, even if the taxpayer has been remiss in attending hearings, provided the submission is made prior to the order. The Court quashed the impugned order and directed the respondent to grant one more personal hearing to the petitioner, consider the petitioner's reply, and pass a speaking order within eight weeks.

Facts

The petitioner, M. Sathess Kumar, filed a writ petition challenging an order dated July 25, 2023, passed by the Deputy State Tax Officer-2, Virudhunagar. The petitioner contended that he had submitted a reply on July 24, 2023, but the respondent passed the impugned order on July 25, 2023, without considering it. The respondent's order incorrectly stated that no reply was filed. The petitioner argued that this constituted a violation of natural justice. The dispute involved an increase in GST from 12% to 18% for works contracts executed for government departments and local bodies, with the petitioner being the intermediary liable to pay and recover the tax from the government.

Key Issues

1. Whether the impugned order dated 25.07.2023 passed by the respondent is illegal and a gross violation of the principles of natural justice, particularly concerning the non-consideration of the petitioner's reply dated 24.07.2023? Petitioner's arguments: The petitioner argued that he had submitted a reply on July 24, 2023, prior to the passing of the impugned order on July 25, 2023. The respondent's assertion that no reply was filed was factually incorrect. The respondent was bound to consider this reply. The assessment order, therefore, was passed in violation of the principles of natural justice. Respondent's arguments: The learned Government Advocate for the respondent submitted that the petitioner was granted three personal hearings, but he did not appear on those dates and did not submit any reply. Despite the petitioner's non-appearance for the hearings, the respondent contended that the petitioner subsequently filed a reply on July 24, 2023, which the respondent was bound to consider.