Tvl P Karuppaiah vs. The State Tax Officer

Facts

The petitioner, P. Karuppaiah, filed a writ petition challenging an assessment order dated July 31, 2023, passed by the respondent, The State Tax Officer, Pudukottai-II Circle, for the tax period 2021-2022. The petitioner contended that neither the show cause notice nor the assessment order was served personally, but rather uploaded to the GSTIN portal, which his accountant failed to communicate. Consequently, the petitioner could not access the portal and participate in the adjudication proceedings. The core issue in the assessment was an alleged mismatch between GSTR-3B and GSTR-7 returns. The petitioner claimed that with an opportunity, he could explain these discrepancies, citing technical glitches and the learning curve associated with the GST regime. He also expressed willingness to deposit 25% of the disputed tax.

Held

The Court held that the impugned assessment order dated July 31, 2023, for the tax period 2021-2022, was liable to be set aside. The primary reasoning was the petitioner's assertion that he was not properly served with the show cause notice and the assessment order, thereby denying him an opportunity to be heard, which violates the principles of natural justice. The Court acknowledged the petitioner's submission regarding technical glitches and the challenges in adapting to the GST portal. The Court also took note of the petitioner's willingness to deposit 25% of the disputed tax and the respondent's lack of serious objection to granting a final opportunity. Consequently, the Court set aside the impugned order and directed the petitioner to deposit 25% of the disputed tax within two weeks. Upon compliance, the set-aside assessment order would be treated as a show cause notice, and the petitioner would be required to submit his objections within four weeks. The respondent was directed to consider these objections and pass a fresh order after affording a reasonable opportunity of hearing. The Court stipulated that if the deposit or objections were not filed within the stipulated periods, the original assessment order would stand revived. The issue of the alleged mismatch between GSTR-3B and GSTR-7 was not decided on merits.

Key Issues

1. Whether the assessment order dated July 31, 2023, passed by the respondent for the tax period 2021-2022 is illegal and liable to be quashed due to non-service of notices and the assessment order on the petitioner, violating principles of natural justice? Petitioner's Arguments: The petitioner argued that the assessment order is bad in law as it was passed without proper service of the show cause notice and the final order. He contended that the uploading of notices and orders on the GSTIN portal, without personal service or intimation, prevented him from participating in the proceedings. He further submitted that technical glitches in the GST portal and the initial adaptation period to the e-mechanism contributed to his 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) to support his claim for an opportunity to present his case. He also offered to deposit 25% of the disputed tax. Respondent's Arguments: The respondent, represented by the Additional Government Pleader, did not raise any serious objection to the petitioner's request for a final opportunity, provided certain conditions were met.