Facts of the Case

The petitioner, Tvl.K.Kumar Raja Projects Private Limited (GSTIN 33AABCK5644G1ZQ), challenged two assessment orders dated 03.02.2023 passed by the State Tax Officer (GST), Nanguneri, Tirunelveli District, for the assessment years 2019-20 and 2018-19. In the first matter, the estimated turnover was Rs. 1,75,85,028/- against a returned taxable turnover of Rs. 1,66,00,941/-, a mismatch of Rs. 9,84,087/-; in the second, the estimated turnover was Rs. 84,80,000/- against a returned taxable turnover of Rs. 2,34,70,767/-, a mismatch of Rs. 1,49,90,767/-. The respondent had issued notices seeking an explanation for these mismatches only through the web portal, which the petitioner stated it had inadvertently missed, resulting in no reply being furnished before the assessment orders were passed.

Issues Involved

  1. Whether assessment orders passed after issuing the explanatory notice only via the web portal — which the petitioner did not access — violated principles of natural justice.

Petitioner's Arguments

  • The petitioner sought quashing of the assessment orders dated 03.02.2023 for both years and a direction to re-do the assessments after affording reasonable opportunity, since the notice explaining the turnover mismatches was uploaded only on the web portal and inadvertently missed.

Respondent's Arguments

  • The respondent had issued notices in respect of the admitted turnover mismatches through the GST web portal, which the petitioner did not avail, resulting in the assessment orders being passed without the petitioner's explanation on record.

Court Order / Findings

  • The Court found that since the notice explaining the turnover mismatch was issued only through the web portal, which the petitioner had inadvertently missed, there was a violation of principles of natural justice, entitling the petitioner to one more opportunity to explain its case.
  • The assessment orders for both years were set aside, with a direction that the respondent grant the petitioner a further opportunity to explain the mismatch, along with a personal hearing, and thereafter pass a speaking order within eight weeks from receipt of the Court's order.
  • Both writ petitions were allowed without costs, with connected miscellaneous petitions closed.

Important Clarification

Issuing a notice explaining a turnover mismatch solely through the GST web portal, without any other reasonable means of ensuring the taxpayer's actual notice, and then proceeding to a best-judgment-style assessment without a personal hearing when the taxpayer inadvertently misses the portal notice, amounts to a violation of natural justice; the remedy is to set aside the assessment and grant a further opportunity to explain and be personally heard before a fresh speaking order is passed.

Sections Involved

  • Central/Tamil Nadu Goods and Services Tax Act, 2017 – assessment provisions – governs scrutiny of returns and best-judgment assessment where turnover mismatches are noticed, subject to natural-justice safeguards.

Decision – In Favour of

The decision was in favour of the Assessee, with both assessment orders set aside and the matters remanded for a fresh hearing and reasoned orders within eight weeks.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case Number: W.P.(MD).Nos.20614 and 20615 of 2023 (with connected W.M.P.(MD).Nos.17031 and 17036 of 2023)
  • Coram: Hon'ble Mrs. Justice S. Srimathy
  • Date of Order: 24 August 2023

Link to Download the Order

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