Madras High Court Remands Assessment Order on Condition of 50% Deposit, Citing Breach of Natural Justice. Tax Assessment for FY 2018-19 Quashed, Matter Remanded for Fresh Adjudication with Pre-Deposit Condition and Lifting of Attachment.

Case Note & Summary

The present writ petition under Article 226 of the Constitution of India was filed by H2B Holiday Booking Hub India Private Limited, represented by its Managing Director, challenging an order dated 13.02.2024 passed by the Deputy State Tax Officer-1, PN Palayam Assessment Circle, Coimbatore, for the financial year 2018-19. The petitioner sought a writ of certiorari to quash the impugned order, primarily on the ground that it was passed in breach of principles of natural justice. The assessment order had been issued by the tax authority, presumably under the Goods and Services Tax (GST) enactments, though the specific statute was not cited in the order. The petitioner contended that the order was made without affording a reasonable opportunity of being heard, thereby violating the fundamental procedural requirement of natural justice. The impugned assessment order was passed on 13.02.2024, determining the tax liability of the petitioner for the period 2018-19. The petitioner alleged procedural infirmities in the passing of the order, including lack of proper notice or hearing. The statutory period for filing an appeal against the assessment order had already expired, leaving the petitioner with the option of invoking the extraordinary jurisdiction of the High Court under Article 226. Upon filing the writ petition, the respondent's counsel accepted notice and appeared. During the proceedings, the learned counsel for the petitioner, on instructions, agreed to pay 50% of the disputed tax demand as a condition for the court to set aside the impugned order and remand the matter for de novo consideration. The primary legal issue was whether the impugned assessment order was vitiated by a violation of natural justice, warranting interference under writ jurisdiction. Ancillary issues included the effect of the expiry of the limitation period for filing a statutory appeal, and the appropriateness of imposing a pre-deposit condition for remanding the matter. The petitioner submitted that the order was passed without giving an adequate opportunity to present its case, amounting to a breach of natural justice. Given that the appeal remedy was time-barred, the petitioner pressed for the writ remedy. The respondent, while not specifically defending the impugned order on merits, did not object to the matter being remanded subject to the condition of deposit of 50% of the disputed tax to secure the interests of the revenue. The High Court, after taking into account the submissions and the endorsement made by the petitioner's counsel agreeing to the pre-deposit, held that it was a fit case to set aside the order and remand. The court emphasized the need to provide the petitioner a reasonable opportunity of being heard, which was the very grievance. Recognizing that the statutory appeal period had lapsed, the court exercised its discretion under Article 226 to provide relief, but balanced the equities by requiring the petitioner to deposit 50% of the disputed tax demand as a pre-condition. This condition served to protect the revenue's interest while ensuring that the petitioner's right to a fair hearing was not compromised. The court also directed that any attachment on the petitioner's bank account in relation to the impugned order would stand raised upon compliance with the deposit condition. Directions were given for the tax officer to pass a fresh order within three months from the date of remittance, after affording adequate opportunity to the petitioner. The writ petition was disposed of on the terms that the petitioner remits 50% of the disputed tax demand within thirty days; upon such remittance, the impugned order stands quashed, the bank attachment is raised, and the matter stands remanded for fresh consideration. No order as to costs. The connected miscellaneous petitions were closed. This outcome partly favored the petitioner by setting aside the order and partly imposed a condition to safeguard the revenue, making it a balanced remedy.

Headnote

Issue of Consideration

Final Decision

The impugned order set aside, matter remanded for reconsideration; petitioner to deposit 50% of disputed tax demand within 30 days; fresh order to be passed within three months; attachment on bank account raised on compliance; no costs.

Law Points