When The GST Department Fails To Serve The Assessment Order, It Is Void

The Madras High Court (Madurai Bench) recently made a significant ruling in the case of M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. vs. Assistant Commissioner, Tuticorin [W.P. (MD) 6874 of 2023 dated August 29, 2023].

The court approved the writ petition and ruled that an assessment order cannot be issued without serving proper GST notice as per the conditions outlined in Section 169(1)(b) of the Central Goods and Services Tax Act, 2017 (“the Central Goods and Services Tax Act”).

Realities In This Subject

In this case, the petitioner, M/S. Tvl. Diamond Shipping Agencies Pvt. Ltd. operates three distinct business verticals under the same PAN. The respondent, which is the Revenue Department issued an impugned order on August 17, 2022, under the CGST Act, demanding payment from the Petitioner vide GST DRC-07 dated August 17, 2022.

The Petitioner, dissatisfied with the Impugned Order, approached the Madras High Court (Madurai Bench) filing a writ petition, seeking the cancellation of the Impugned Order and requesting the Respondent to reassess the case.

The Petitioner argued that the Impugned Order was passed without taking into account the Annual Returns in GSTR-9 and the Audit Statement filed in GSTR-9C. Furthermore, the Petitioner claimed that they were not given an opportunity to submit the required documents.

It was also highlighted that no physical notice or order was served under Section 169(1)(b) of the CGST Act, and the Petitioner was not granted a chance to be heard. It is a violation of the principle of natural justice, stated the petitioner.

A Report on The CGST Act inquiry.

The main question before the court was whether an assessment order could be issued without serving the necessary notice as per the conditions stipulated in Section 169(1)(b) of the CGST Act.

Ruling of The Court

In its judgment, the Madras High Court (Madras Bench) in W.P. (MD) 6874 of 2023 made the following observations and rulings:

• The Madras High Court (Madurai Bench) observed that the Impugned Order was issued without fulfilling the requirement of serving notice as per Section 169(1)(b) of the CGST Act. Furthermore, the court noted that the order was passed without taking into account the fact that the Petitioner conducts operations in three distinct business verticals.
• The court quashed the Impugned Order, thereby allowing the Writ Petition.
• The Court directed the Respondent to provide the Petitioner with an opportunity for a personal hearing and instructed the Petitioner to present the necessary evidence and documents. And, the Respondent officers were ordered to issue the required orders.
• The court further directed the Respondent to complete the assessment proceedings within eight weeks from the date of receiving the court’s order.

This ruling by the Madras High Court (Madurai Bench) clarifies the importance of serving proper notice and upholding the principles of natural justice in assessment proceedings under the CGST Act.