No proposal in Pre-Assessment Notice for levy of interest or Penalty: Madras HC quashes Assessment Order [Read Order]

Pre - Assessment - Notice - Penalty - Madras - HC - Assessment - Order - TAXSCAN

The Madras High Court quashed an assessment order on the ground that there was no proposal in pre-assessment notice for levy of interest or penalty.

The writ petitioner is K.Baskaran. The writ petition was filed under Article 226 of the Constitution of India to challenge the proceedings of the respondent dated 24.01.20220 passed in terms of the Central Goods and Services Tax Act, 2017. The Court specifically noted that though the impugned proceedings have been concluded without affording an opportunity of hearing to the petitioner, no fault can be attributed to the officers.

The impugned order levies interest under Section 50 as well as penalty under Section 73(9) of the Act, over and above, reversal of Input Tax Credit (ITC).

Adithya Reddy, Counsel, appeared for the petitioner and T.N.C.Kaushik, Additional Government Pleader, argued for the respondent.

The Bench of Dr. Justice Anita Sumanth observed that “Admittedly, there was no proposal in the preassessment notice either for levy of interest or penalty. To this extent the impugned order has travelled beyond the scope of the show cause notice.”

The Court further noted that “Thus, to that extent, I set aside the impugned order subject to the petitioner appearing before the respondent with a response to the show cause notice as well as to the levy of interest under Section 50 andpenalty under Section 73(9) of the Act as contained in the impugned order.”

The Court also made it clear that the respondents shall pass an order within a period of two weeks from 23.03.2023 and that if the petitioner does not avail the opportunity as extended under this order, then challenge to the impugned order will fail and the impugned order will stand revived without further reference to the petitioner .

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