Facts of the Case

The petitioner (whose full name is not clearly captured in the available record, represented by Sri Venkatram Reddy Mantur, Advocate) challenged before the High Court of Andhra Pradesh an assessment order dated 28.04.2022 in Rc.No.I(9)/157/2020-10, passed by the Assistant Commissioner, Commercial Tax, for the assessment period July 2017 to September 2019. The impugned order recorded that a show cause notice in Form GST DRC-01 dated 11.03.2020 had been issued but had gone unanswered; the petitioner contended that the notice was never actually received on account of the onset and prevalence of the COVID-19 pandemic, during which business premises remained closed.

Issues Involved

  1. Whether an assessment order passed on the footing that a show cause notice went unanswered, when the assessee credibly claims non-receipt due to the COVID-19 pandemic, is sustainable.
  2. Whether the petitioner should be granted a fresh show cause notice and an opportunity of hearing.

Petitioner's Arguments

  • The petitioner never received the SCN dated 11.03.2020 because it coincided with the onset of the COVID-19 pandemic, during which business premises were closed, and therefore had no occasion to reply before the impugned assessment order was passed.
  • The impugned order itself recorded, incorrectly, that a Form GST DRC-01 notice had been issued and gone unanswered, when in truth the petitioner never came to know of it because of the pandemic-related shutdown of business operations during that period.
  • The petitioner had good grounds to place before the authority and sought an opportunity of hearing, relying on a coordinate order dated 17.03.2023 in W.P. No.5114 of 2023, where under similar circumstances the Court had set aside the assessment order and directed a fresh SCN with an opportunity to respond.

Respondent's Arguments

  • The learned Government Pleader for Commercial Tax, representing the respondents, opposed the writ petition, defending the validity of the SCN issuance and the resultant assessment order dated 28.04.2022 covering the period July 2017 to September 2019.

Court Order/Findings

  • The Court found force in the submission that, during the COVID-19 period, business premises were closed and the petitioner had no occasion to know of the SCN so as to give an effective reply, and, following its own precedent in W.P. No.5114 of 2023 on materially identical facts, held that the impugned assessment order deserved to be set aside in the interest of justice.
  • The writ petition was allowed; the assessment order dated 28.04.2022 in Rc.No.I(9)/157/2020-10 was set aside, with a direction to the first respondent to issue a fresh SCN within two weeks, grant sufficient time for the petitioner's explanation/objections, conduct an inquiry, afford a personal hearing, and pass a fresh assessment order in accordance with governing law and rules. No costs were awarded, and pending interlocutory applications, if any, were closed.

Important Clarification

An assessment order founded on a Form GST DRC-01 show cause notice that the taxpayer plausibly did not receive on account of COVID-19 pandemic disruption (closure of business premises) is liable to be set aside for denial of an effective opportunity to respond, with directions for a fresh SCN, reply period, inquiry and personal hearing before a fresh order is passed. Courts have shown a consistent, precedent-based willingness to extend this relief to similarly placed taxpayers whose show cause notices were issued during the pandemic period.

Sections Involved

  • Form GST DRC-01 — the prescribed format of show cause notice under the CGST/APGST Act, 2017, preceding a demand under Section 73/74 and requiring effective service for a valid opportunity to reply.
  • Assessment provisions of the CGST/APGST Act, 2017 governing the demand for the tax period July 2017 to September 2019, under which the impugned order was originally passed.

Decision – In Favour of

The decision is in favour of the Assessee. The assessment order was set aside on the ground of non-receipt of the show cause notice due to COVID-19 disruption, and the matter was remanded with a specific timeline for a fresh SCN, reply, inquiry and hearing before any fresh order is passed.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Andhra Pradesh
  • Case No.: WRIT PETITION No.24431 of 2023
  • CNR: Not available
  • Coram: Hon'ble Sri Justice U. Durga Prasad Rao and Hon'ble Sri Justice A.V. Ravindra Babu
  • Decision Date: 11 October 2023
  • Disposal Nature: Allowed; assessment order set aside for fresh show cause notice

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