Tvl. Shisha Sri Timber vs. The Commissioner Of Commercial Taxes

Facts

The petitioner, Tvl. Shisha Sri Timber, represented by its Proprietor, filed three writ petitions challenging assessment orders dated 31.10.2020 passed by the State Tax Officer (Investigation) for the periods 2017-18, 2018-19, and 2019-20. The petitioner contended that a show cause notice dated 02.09.2020 was sent via registered post on 01.10.2020 and received on 05.10.2020, giving the petitioner until 04.11.2020 to file objections. However, the respondent passed the impugned orders on 31.10.2020, allegedly violating principles of natural justice by not providing the full 30-day period. Furthermore, the petitioner argued that the investigation officer lacked the power to pass assessment orders, which should have been done by the jurisdictional assessing officer as per a circular dated 31.05.2019.

Held

The Court held that the impugned assessment orders were liable to be quashed on two grounds. Firstly, it found a violation of the principles of natural justice. Although the petitioner had not explicitly requested a personal hearing, Section 75(4) of the CGST Act mandates that an opportunity of hearing must be granted where any adverse decision is contemplated against a person. Since the respondents contemplated passing adverse orders, they were bound to grant a personal hearing to the petitioner, which they failed to do. Secondly, the Court agreed with the petitioner's contention that the State Tax Officer (Investigation) was not the proper authority to pass assessment orders. Relying on the circular dated 31.05.2019, the Court noted that such orders should be passed by the jurisdictional assessing officer. The circulars, while not binding on the assessee, are binding on the authorities. Therefore, the assessment orders passed by the investigation officer were against the circular and thus unsustainable. The Court quashed the impugned orders and directed the Assessing Officer to grant an opportunity to the petitioner, conduct a fresh inquiry, and pass orders within four months.

Key Issues

1. Whether the impugned assessment orders, passed on 31.10.2020, are liable to be quashed for violating the principles of natural justice due to insufficient time granted to the petitioner to file objections after receiving the show cause notice dated 02.09.2020, which was dispatched on 01.10.2020 and received on 05.10.2020, thereby not providing the full 30 days as stipulated? (Question of mixed law and fact, concerning principles of natural justice and procedural timelines). 2. Whether the impugned assessment orders are invalid because they were passed by the State Tax Officer (Investigation) instead of the jurisdictional assessing officer, as contended by the petitioner based on a circular dated 31.05.2019? (Question of law, concerning the authority to pass assessment orders). Petitioner's arguments: The petitioner argued that the short period between receiving the show cause notice and the passing of the assessment order violated natural justice. They also contended that Section 75(4) of the CGST Act mandates a personal hearing when an adverse decision is contemplated, which was not granted. Additionally, the petitioner asserted that the investigation officer was not empowered to pass assessment orders, citing a circular dated 31.05.2019 which mandates the jurisdictional assessing officer to do so. Respondents' arguments: The respondents contended that the petitioner had not sought any personal hearing. They did not provide arguments regarding the authority of the investigating officer to pass assessment orders or the sufficiency of the time granted for objections.