Satyanarayana Medical Distributors Vs Assistant Commissioner Of State Tax Intelligence
Date: February 11, 2025
Subject Matter
Non-issuance of Rule 142(1A) notice would invalidate the assessment
Summary
The Andhra Pradesh High Court addressed a writ petition from Satyanarayana Medical Distributors, contesting an assessment order under the Goods and Services Tax Act, 2017. The petitioner claimed a violation of natural justice because the issued show-cause notice only pertained to the period of July 2017 to March 2018, while the assessment itself extended to February 2021. The petitioner argued that they were not given a chance to respond to objections regarding the additional assessment period and pointed out the failure to issue a mandatory notice under Rule 142(1A) before completing the assessment. The respondents countered this by indicating that an amendment to Rule 142(1A) in October 2020, which changed "shall" to "may," rendered notice issuance directory rather than mandatory. However, the High Court referred to a previous ruling that emphasized the requirement of notice prior to the amendment, indicating that absence of such notice would invalidate the assessment. Although the court recognized the directory nature of Rule 142(1A) post-amendment, it upheld the need for fairness, suggesting a notice should still be issued due to the assessment covering both periods. Consequently, the court granted the petition, annulled the assessment order, and directed the Assessing Authority to act in accordance with its earlier judgment. The case was allowed, with no cost implications and closure of any pending interim applications.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
The petitioner, who is a registered dealer under the Goods and Services Tax Act, 2017, being aggrieved by a common assessment order, dated 05.03.2022, has approached this Court, by way of the present Writ Petition.
2. The case of the petitioner is that, the order under challenge suffers from a violation of principles of natural justice in as much as the show-cause notice was issued, in relation to the period July, 2017 to March, 2018. However, the assessment order, has been passed for the period July, 2017 to February, 2021, on the basis of the aforesaid show-cause notice. It is submitted that, on this account, the impugned assessment order has violated the principles of natural justice as no proposal was put before the petitioner for filing objections, in relation to the period for which no show-cause notice has been issued.
3. The petitioner would contend that the Notice under Rule 142 (1) A has not been issued prior to the assessment.
4. The petitioner also contends that the issue is now squarely covered by a judgment of this Court, dated 13.10.2023, in W.P.No.12850 of 2022.
5. The learned Government Pleader for Commercial Tax appearing for the respondents would submit that Rule 142 (1) A, had been amended in October, 2020. He would also submit that prior to the amendment there was a mandatory requirement of issuance of Notice under Rule 142 (1) A, as the word ‘shall’ was used. He would submit that subsequent to the amendment the word ‘shall’ was substituted with the word ‘may’. Consequently, the Rule has become directory and not mandatory. He further submits that, the assessment period subsequent to October, 2020 would not be affected by non-issuance of Tax Intimation Notice under Rule 142 (1) A.
6. This Court, in the judgment, dated 13.10.2023 in W.P.No.12850 of 2022, had gone into the question of whether an assessment order can be passed without prior Tax Intimation Notice under Rule 142 (1) A. In this case, the tax period under consideration, was both the pre-amendment tax period and the post-amendment tax period. This Court, after considering the submissions made on both sides, had held that the issuance of a Tax Intimation Notice under Rule 142 (1) A of the Rules is mandatory prior to the amendment in October, 2020 and non-issuance of such a Notice would render the assessment order invalid. This Court, also considered the fact of non-issuance of Rule 142 (1) A of Tax Intimation Notice for the Post Amendment Tax Period and had held that, as the impugned order of assessment was for both periods, it would be appropriate that, a Notice is issued, in relation to the subsequent period also, under the un-amended Rule 142 (1) A.
7. In these circumstances and in view of the similarity in facts, this Writ Petition is allowed in terms of the Order of this Court, dated 13.10.2023, in W.P.No.12850 of 2022 and the impugned order is set aside, leaving it open to the Assessing Authority to take appropriate steps in terms of the Orders of the Court, dated 13.10.2023.
There shall be no order as to costs.
As a sequel, interlocutory applications pending, if any shall stand closed .