K. Sashi Narayana vs. The State Of Andhra Pradesh

Facts

The petitioner, K. Sashi Narayana, a dealer registered under the Andhra Pradesh Goods and Services Tax Act, 2017, challenged an assessment order dated 31.03.2026 for the tax period 2019-2020. This order, passed in Form DRC-07 by the Assistant Commissioner of State Taxes, levied a tax of Rs. 47,971, along with interest and penalty. The petitioner contended that the order was passed without a show cause notice as required by Section 73 or 74 of the GST Act and that the assessment proceedings were barred by limitation. The respondents, represented by the Government Pleader, stated that the proceedings were based on an audit inspection, though this was not mentioned in the impugned order. The High Court reviewed the order and noted that no notices were issued to the petitioner before its passing.

Held

The Court held that the impugned assessment order dated 31.03.2026 is unsustainable in law. The primary reason for this decision was that the order was passed without issuing any notice to the petitioner, specifically in Form DRC-01 or Form DRC-01A, as required by the provisions of the GST Act. The Court found that the absence of such mandatory notices rendered the order invalid. While the respondents indicated the proceedings were based on an audit inspection, the Court emphasized that even in such cases, proper notice must be issued to the taxpayer. Consequently, the Court set aside the impugned order on this ground alone. However, the Court clarified that this decision does not preclude the Assistant Commissioner of State Taxes from initiating appropriate assessment proceedings for the tax period in question, provided proper notices are issued in accordance with the law. The Court also directed that the period from the date of the impugned order until the receipt of the current order be excluded for the purpose of limitation for any fresh proceedings. The issue of limitation was not definitively decided as the primary ground for setting aside the order was the lack of notice.

Key Issues

1. Whether the assessment order dated 31.03.2026, passed for the tax period 2019-2020, is sustainable in law, considering the petitioner's contention that it was issued without a show cause notice under Section 73 or 74 of the GST Act and that the proceedings are barred by limitation. Petitioner's Arguments: The petitioner argued that the impugned assessment order is unsustainable on various grounds. Specifically, it was contended that the order was passed without issuing a show cause notice as contemplated under Section 73 or 74 of the GST Act. Furthermore, the petitioner asserted that the assessment proceedings themselves were barred by limitation. Revenue's Arguments: The learned Government Pleader, on instructions, submitted that the impugned proceedings were based on an audit inspection. However, the Court noted that no such mention was made in the impugned order. The Government Pleader also conceded that even if based on an audit inspection, an appropriate notice should have been issued to the petitioner before initiating further action.