Tvl Sri Subha Agencies vs. The Deputy State Tax Officer - 1

Facts

The petitioner, Tvl.Sri Subha Agencies, represented by its Proprietor S.Meena Kumari, filed a Writ Petition before the Madurai Bench of the Madras High Court challenging an assessment order dated 25.12.2023, passed by the Deputy State Tax Officer-1 for the tax period 2017-18. The petitioner contended that neither the show cause notice nor the assessment order was served, and they were unable to access the GSTIN portal to participate in the proceedings. The core of the dispute involved an alleged mismatch between GSTR-3B and GSTR-2A returns. The petitioner claimed that technical glitches and the learning curve associated with the new GST system prevented them from responding to notices. They expressed willingness to deposit 25% of the disputed tax and sought a final opportunity to present their objections.

Held

The Court held that the assessment order dated 25.12.2023, passed by the Deputy State Tax Officer-1 for the year 2017-18, should be treated as a show cause notice, and the petitioner should be granted an opportunity to present their objections. The Court acknowledged the petitioner's submission regarding non-service of notices and inability to access the portal, attributing it to technical issues and the initial adaptation phase of the GST regime. The Court's reasoning was guided by the principle of natural justice, emphasizing the need for a fair hearing. The ratio decidendi is that procedural irregularities, such as non-service of notices, which prevent an assessee from participating in assessment proceedings, warrant a remand for fresh consideration. The Court directed the petitioner to deposit 25% of the disputed tax within two weeks. Upon compliance, the impugned order would be treated as a show cause notice, and the petitioner would have four weeks to file objections. The respondent was directed to consider these objections and pass a fresh order after affording a reasonable opportunity of hearing. The Court explicitly stated that if the deposit or objections were not filed within the stipulated time, the original assessment order would stand revived.

Key Issues

1. Whether the assessment order dated 25.12.2023, passed by the Deputy State Tax Officer-1 for the period 2017-18, is liable to be quashed on the grounds of non-service of notice and denial of opportunity to the petitioner? Petitioner's Arguments: The petitioner argued that the assessment order is illegal and devoid of merits because they never received the show cause notice or the final assessment order. They further contended that they were unable to access the GSTIN portal, which prevented their participation in the adjudication process. The petitioner attributed these issues to technical glitches in the GST portal and the initial challenges faced by assessees in adapting to the e-mechanism. They relied on the judgment of this Court in M/s.K.Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise in W.P.(MD)No.11924 of 2024 dated 10.06.2024. The petitioner also stated their readiness to deposit 25% of the disputed tax and requested a final opportunity to present their objections regarding the alleged discrepancies between GSTR-3B and GSTR-2A. Respondent's Arguments: The learned Government Advocate appearing for the respondent did not raise any serious objection to the petitioner's request for a final opportunity, subject to certain conditions.