Tvl. Travel Inn vs. The Deputy State Tax Officer I

Facts

The petitioner, Tvl.Travel Inn, represented by its Proprietor, filed a writ petition challenging an order dated 07.03.2024 and a consequential DRC-07 order dated 07.03.2024, both pertaining to the assessment year 2019-2020. The petitioner contended that the impugned order and assessment notice were not served personally or by registered post but were only uploaded to the GSTIN portal. Crucially, the petitioner's GST registration had been cancelled on 02.08.2022, meaning they had no reason to check the portal and were unaware of the proceedings. The petitioner claimed that discrepancies between GSTR-3B vs GSTR-1, GSTR-3B vs GSTR-2A, and GSTR-8 vs GSTR-1 could be explained if an opportunity was provided. The petitioner also stated readiness to pay 25% of the disputed tax and sought a final opportunity to present objections. The respondents agreed to lift the bank attachment upon payment of 25% of the disputed tax.

Held

The Court held that the impugned order dated 07.03.2024 and the consequential DRC-07 order dated 07.03.2024 are set aside. The Court reasoned that the petitioner was not afforded a proper opportunity to present their case due to the alleged non-service of notices and orders, compounded by the cancellation of their GST registration. The Court acknowledged the petitioner's submission regarding technical glitches and the adaptation period for the GST mechanism. The ratio decidendi is that principles of natural justice must be adhered to, and where there is a failure in proper service of notice, especially when the assessee's registration is cancelled, a fresh opportunity should be granted. The Court directed the petitioner to deposit 25% of the disputed tax within two weeks of receiving the order. Upon compliance, the bank attachment would be lifted. The impugned assessment order would be treated as a show cause notice, and the petitioner would have four weeks to submit objections with supporting documents. The first respondent is to consider these objections and pass orders after affording a reasonable opportunity of hearing. If the deposit or objections are not filed within the stipulated time, the original assessment order would stand revived.

Key Issues

1. Whether the impugned assessment order and consequential DRC-07 order are liable to be quashed on the ground of non-service of notice and order to the petitioner, violating principles of natural justice, particularly when the petitioner's GST registration was cancelled prior to the issuance of the impugned proceedings? (Question of law and fact, turning on principles of natural justice and procedural fairness under GST law). Petitioner's Arguments: - The petitioner argued that the impugned order and assessment notice were not properly served, as they were only uploaded to the GST portal. This violated principles of natural justice, especially since their GST registration had been cancelled, making it impossible for them to check the portal. - They contended that technical glitches in the GST portal and the learning curve for assessees adapting to the e-mechanism contributed to their inability to respond. - The petitioner relied on the judgment in M/s.K.Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise (W.P.(MD)No.11924 of 2024) dated 10.06.2024. - They expressed willingness to pay 25% of the disputed tax and sought a final opportunity to present their objections. Revenue's Arguments: - The judgment records that the learned counsel for the respondents agreed to lift the bank attachment on payment of 25% of the disputed tax, implying an acceptance of the petitioner's proposal for a conditional hearing.