An assessment order has been quashed by the Punjab and Haryana High Court, holding that the failure to acknowledge the response of the applicant to SCN amounts to a breach of the principles of natural justice.
The Bench of Justice Deepak Sibal and Justice Lapita Banerji stated that the applicant had submitted a response to the SCN issued before him on 31.07.2024, but since such a reply could not be traced by the respondent authorities on the GST portal, it could not be acknowledged before or during passing of the assessment/adjudication order dated 07.01.2025.
From an SCN issued on July 31, 2024, for the FY 2017-18, the case has emerged, wherein the applicant was accused of fraudulently passing on ineligible ITC. The notice asked the applicant to elaborate on the reason for not imposing tax obligations.
The applicant, in answer, submitted a response dated October 16, 2024, refusing all allegations of fraud. But, when the adjudication order was passed on January 7, 2025, the authority recorded that no response had been submitted by the applicant.
The petitioner submitted a reply to the show cause notice; however, the response could not be found on the GST portal. As a result, it was not taken into account when the assessment order was issued.
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The High Court identified this oversight as a significant procedural error. It concluded that issuing an order without considering the taxpayer’s response indicated a lack of due diligence and breached fundamental principles of natural justice.
The Bench outlined that an adjudicating authority needs to acknowledge all related submissions before arriving at a decision when allegations of fraud are engaged.
The Court, setting aside the impugned assessment order, quashed the consequential measures considered by the authorities, along with the freezing of the bank account of the applicant.
But, the court allotted the chance to the revenue authorities to start fresh adjudication proceedings, with a direction that the response of the applicant on October 16, 2024, should be duly considered, and any fresh order should be passed as per the law.
| Case Title | Yervik Hindustan Exports INC vs. Union of India |
| Case No. | CWP-8799-2026 |
| For Petitioner | Mr. Tarang Goyal |
| For Respondent | Mr. Rishab Kapoor |
| Punjab and Haryana High Court | Read Order |
