M/S. Vemas Trading Company vs. The Deputy Assistant Commissioner (St) - Ii

Held

The Court held that the impugned assessment order dated August 30, 2024, passed in a consolidated manner for multiple tax periods (2019-20 and 2021-22) is liable to be set aside. The Court found merit in the petitioner's primary ground of challenge, relying on the decision in S.J. Constructions v. The Assistant Commissioner & Others. This precedent established that a single composite assessment order for more than one tax period is impermissible. The Court reasoned that such a practice would adversely affect the taxpayer's statutory rights, including availing benefits under Section 128 and pursuing appeals under Sections 73 or 74 of the Act. Consequently, the impugned order was set aside. The respondents were permitted to initiate fresh proceedings separately for each assessment year. As a condition for this relief, the petitioner was directed to deposit 20% of the disputed tax within six weeks. Any payments already made by the petitioner after the impugned order were to be set off. All consequential recovery proceedings were revoked, and the period from the impugned order's date to the receipt of this order was excluded for limitation purposes.

Facts

M/s. Vemas Trading Company, a registered taxpayer engaged in trading chilies, filed a writ petition challenging an assessment order dated August 30, 2024, passed by the Deputy Assistant Commissioner ST II for the tax periods 2019-20 and 2021-22. The petitioner argued that the consolidated assessment order for multiple tax periods was illegal and violative of GST provisions and principles of natural justice. Consequential recovery proceedings initiated on September 29, 2026, were also challenged. The petitioner relied on a previous High Court judgment in S.J. Constructions v. The Assistant Commissioner & Others. The respondents did not dispute the legal position regarding composite orders but argued that the impugned order was passed two years prior, suggesting no relief should be granted.

Key Issues

1. Whether a consolidated assessment order can be passed for multiple tax periods under the GST Act, 2017, and if not, does this violate the principles of natural justice and statutory provisions? Petitioner's Arguments: The petitioner contended that the impugned assessment order, passed in a consolidated manner for tax periods 2019-20 and 2021-22, is unsustainable in law. They relied on the decision in S.J. Constructions v. The Assistant Commissioner & Others, which held that a single show cause notice or composite assessment order cannot be passed for more than one tax period. This practice, according to the petitioner, impacts the right to seek benefits under Section 128 and the remedy of appeal under Sections 73 or 74 of the Act. Respondents' Arguments: The learned Assistant Government Pleader did not dispute the legal position regarding the passing of composite orders. However, they submitted that the impugned order was passed approximately two years ago and therefore, no relief should be granted.