Assessment Order Quashed Due to Absence of Reasoning in GST Proceedings

Case Title: M/s. Sri Sai Agencies v. Commercial Tax Officer
Court: High Court of Judicature at Madras
Petition No.: W.P. No. 1774 of 2025
Category of Dispute: Input Tax Credit (ITC) Discrepancy & Assessment Procedure
Date of Judgement: 27.01.2025
Relevant Sections: Section 161 of CGST Act, Article 226 of Constitution of India
CGST Rules/Forms Involved: GST DRC-07, GSTR-3B, GSTR-9, GSTR-2A

Facts of the Case

(Ref: Para 2–4)

• The petitioner, a registered dealer under GST, challenged the assessment order dated 30.04.2024 and the rectification order dated 23.10.2024.

• Discrepancies noted by the department included under-declaration of output tax and excess ITC claim based on return data in GSTR-1, GSTR-2A, GSTR-3B, and E-way bills.

• The petitioner submitted objections on 05.01.2024 pointing out that the discrepancies arose due to auto-population errors in Table 6 and Table 9 of GSTR-9, which did not reflect actual ITC as per GSTR-3B and 2A.

• Petitioner provided detailed tabular reconciliation and supporting GSTR-3B filings to establish there was no excess ITC claimed.

Question(s) in Consideration

(Ref: Para 2 & 5)

• Whether the impugned assessment order passed on 30.04.2024 was valid in law, considering it summarily rejected the petitioner’s reply without giving reasons?

• Whether failure to pass a reasoned or speaking order renders the assessment unsustainable under GST law?

Observation of Court

(Ref: Para 5–6)

• The Court noted that the impugned assessment order merely stated the taxpayer’s reply was “not acceptable” without assigning any reasons.

• The order lacked the necessary reasoning and thereby failed to qualify as a “speaking order.”

• The department agreed to redo the assessment after giving proper opportunity of hearing.

Judgement of the Court

(Ref: Para 7)

• The High Court set aside the impugned orders dated 30.04.2024 and 23.10.2024.

• Directed the respondent to redo the assessment by passing a reasoned speaking order after affording a reasonable opportunity of hearing to the petitioner.

• The writ petition was accordingly disposed of, with connected miscellaneous petitions also closed.

Between Fine Lines (Simplified Summary in 5 lines)

The taxpayer’s GST assessment was set aside because the tax officer did not provide reasons for rejecting the taxpayer’s explanation. The taxpayer had submitted detailed reconciliations showing no excess ITC. The Court ruled that orders must be reasoned. The tax officer must now reassess after giving the taxpayer a fair hearing. It reinforces procedural fairness in GST assessments.

Summary of Referred Cases

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