M/S. Rasi Trading Company vs. The State Tax Officer(Ins)-Ii

Facts

The petitioner, M/s. Rasi Trading Company, filed a writ petition challenging an order of assessment dated 30.11.2023 passed by the Respondent, the State Tax Officer (Ins)-II. The petitioner contended that the assessment order was passed in violation of principles of natural justice due to insufficient opportunity of hearing. The petitioner had received a DRC-01A notice on 02.03.2023 and submitted a reply on 17.04.2023. Subsequently, a DRC-01 notice was issued on 20.07.2023, with a hearing date of 19.08.2023. This date was rescheduled to 21.09.2023 after the petitioner pointed out that the original date fell on a Saturday. The petitioner claims they did not appear on the rescheduled date, and the respondent proceeded to pass the order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017.

Held

The Court held that the impugned order of assessment was passed in violation of Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017. The Court found that the petitioner was not afforded a sufficient opportunity of hearing and that their objections to the DRC-01A notice were not considered. Furthermore, the Court noted that the order did not determine the tax payable by the petitioner, which is a requirement under Section 74. The reasoning was that the procedural infirmities, particularly the lack of a proper hearing and consideration of objections, rendered the order illegal and arbitrary. The ratio decidendi is that a tax determination order under Section 74 must be a speaking and well-reasoned order, preceded by a fair opportunity of hearing and consideration of the assessee's submissions. Consequently, the Court set aside the impugned order and remitted the matter back to the respondent for fresh consideration, directing the respondent to grant an opportunity of hearing to the petitioner. The petitioner is to appear with a written explanation and relevant documents, after which the respondent shall pass a speaking/well-reasoned order. The Court also stipulated that if the petitioner fails to attend the hearing, the respondent may pass appropriate orders, which must also be well-reasoned. No issue was expressly left undecided.

Key Issues

1. Whether the assessment order passed by the Respondent is liable to be quashed for violation of principles of natural justice, specifically for not providing sufficient opportunity of hearing to the petitioner, as contemplated under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner argued that the impugned order was passed in violation of Section 74 of the Act, which mandates a well-reasoned order determining the tax payable. They contended that their objections to the DRC-01A notice were not considered and that no further opportunity of hearing, as contemplated by the Act, was provided. The petitioner sought to quash the order and requested a fresh assessment after affording a personal hearing. Respondent's arguments: The judgment does not record any specific arguments made by the Respondent. However, the procedural history indicates that the Respondent issued multiple notices and rescheduled the hearing date.