GST Assessment Order u/s 62 incomplete without S. 46 Notice: Allahabad HC quashes Orders [Read Order]

The Allahabad High Court has quashed the GST assessment and appellate orders issued against a company after finding that the assessment order under Section 62 of the Goods and Services Tax Act (GST Act) was passed without issuing the mandatory notice under Section 46.

The petitioner, M/S Xestion Advisor Private Limited, a company engaged in management consultancy services, approached the Court challenging the assessment order dated 21.09.2020 and the appellate order dated 12.06.2024.

The petitioner’s counsel argued that the assessment order under Form DRC-07 was passed by the authorities on 21.09.2020 for failure to file GSTR-3B returns on time. However, the notice under Section 46, which calls upon the taxpayer to submit the return within 15 days, was uploaded only on 25.09.2020 four days after the assessment order had already been passed.

This deprived the petitioner of the statutory opportunity to comply and rectified the filing, violating both the procedural safeguards under the GST Act and the principles of natural justice.

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The State, through its Additional Chief Standing Counsel, defended the impugned orders, but the High Court, after reviewing the records, noted that the demand order under Section 62 for ₹19.8 lakhs had been passed prematurely, without following the due process required under Section 46. The Court found that both the assessing and appellate authorities had failed to address this fundamental procedural lapse.

The Allahabad High Court relied on the Jharkhand High Court’s decision in Vinman Constructions Limited v. State of Jharkhand (2022), where a similar demand order was set aside for non-issuance of the requisite notice. The Allahabad High Court observed that such procedural violations, which lead to serious financial and penal consequences, cannot be sustained under law.

The court noted that “The record clearly shows that the assessment order under section 62 of the GST Act suffers from serious lacuna due to non-issuance of notice under section 46 of the GST Act. Even the appellate court has failed to taken note of the said fact. Therefore, the impugned orders suffer from serious infirmity for non-compliance of principles of natural justice and procedural requirement prescribed under the Statute in absence of proper service on the petitioner.”

Accordingly, the bench of Justice Piyush Agarwal quashed both the original assessment order and the appellate order, remitting the matter back to the Deputy Commissioner, State Tax, Noida, with directions to issue a fresh notice under Section 46 within two weeks.

The petitioner was directed to appear before the tax authority on the next date fixed so that the proceedings can be concluded expeditiously. The Court also clarified that any amount deposited during the pendency of the case will remain subject to the outcome of the fresh proceedings.

To Read the full text of the Order CLICK HERE

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