In a recent ruling, the Madras High Court directed the taxpayer to regard the Order as a Show Cause Notice ( SCN ) due to officers’ direct replication of audit observations without adequate adjudication or consideration of the assessee into the SCN and GSTR DRC-07.
The bench of Justice Senthilkumar Ramamoorthy observed that the identical language in both the show cause notice and the impugned order indicated that audit observations were directly transposed into the show cause notice and subsequently adopted as conclusions in the impugned order.
The brief facts is that following an audit of the petitioner’s accounts, objections were raised, but not accepted, leading to an intimation issued on 20.09.2023, followed by a SCN on 29.09.2023. The petitioner responded on 26.12.2023, after which the impugned order was issued.
Counsel for the petitioner argued that the language used in both the show cause notice and the impugned order is identical, indicating predetermination. He cited the ORYX Fisheries case and contended that proceedings lacking a reasonable opportunity for response are liable to be interfered with.
It was submitted that by referring to the impugned order, counsel submitted that the contents of impugned order, as regards conclusions recorded therein, are identical to the conclusions recorded in the show cause notice and in the earlier audit observations.
The Additional Government Pleader submitted that necessary documents were not enclosed with the petitioner’s objections or response, resulting in confirmation of the tax proposal. He suggests treating the impugned order as a show cause notice due to the identical language used.
The Madras High Court stated that “The adjudication process would be robbed of meaning unless the authority undertaking adjudication acts in an objective manner without predetermining the issues arising for consideration. Since adjudication was not undertaken in such manner, the impugned order cannot be sustained. However, it shall be treated as a show cause notice and responded to.”
The court concluded that the adjudication process must be objective and without predetermination. As such, the impugned order cannot stand and is to be treated as a show cause notice. The petitioner was given 15 days to respond, after which the respondent has to issue a fresh order within three months, considering the observations made.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
