Fundamental breach is sufficient to vitiate the orders of assessment.

Case Details:

Issue- In the above case, the petitioner has challenged 5 summary demand orders produced collectively passed by the Superintendent of Taxes on 23-4-2021 (which are based on a common assessment order dated 23-4-2021) raising demands of Central as well as GST and IGST from the petitioner with penalty for the tax periods 2017-18 to 2020-21. The Superintendent issued a show-cause notice to the petitioner for recovery of unpaid tax and penalty for financial year 2018-19. The petitioner replied to the show-cause notices resisting the demands and contending that the input tax credit was correctly availed but on 23-4-2021 the Superintendent of Taxes issued the order of cancellation of registration of the petitioner and also issued 5 separate orders confirming the tax and penalty demands against the petitioner for the tax periods 2017-18 till 2020-21. Superintendent of Taxes took a stand that once notice is issued for a particular tax period, no notice is necessary for other tax periods stems from utter ignorance of law which is a fundamental breach.

Held- It was held that the Superintendent of Taxes has passed five separate orders for different tax periods starting with 2017-18 to 2020-21 raising tax demands with penalty. We have noticed that he had issued show-cause notice for assessment and penalty on 10-3-2021 only for the assessment period 2018-19. Without any further show-cause notice he could not have assessed the petitioner for remaining years and imposed penalties. His stand that once notice is issued for a particular tax period, no notice is necessary for other tax periods stems from utter ignorance of law. This fundamental breach is sufficient to vitiate the orders of assessment barring one for the period in relation to the year 2018-19.  Even otherwise the impugned order cannot sustain. The Superintendent of Taxes has passed an order which runs into close to 150 pages in which he has discussed range of issues completely unconnected to the case on hand. He has referred to the requirement for passing Board resolutions and circulations as flowing from the Company Law. He has discussed the issue of authorisation as referred to in the GST regime. He has entered into the arena of what are the requirements of a valid affidavit, who should sign such affidavit, who should notarise it and who should be the witnesses. He has referred to section 195 of IPC which provides for punishment for false evidence. He has referred to the concepts of power of attorney and Negotiable Instruments Act. He has discussed a law on Transfer of Property and the essentials of a lease. He has spoken on the remedies available with the lessor. He has also taken note of different kinds of leases. He has reproduced literature from books and presumably from internet. He has extensively reproduced from judgments of various Courts discussing constitutional principles. All these references are without showing relevance to the issues at hand. The ultimate observations and conclusions in the order are hard to find and more difficult to understand. The order passed by the Superintendent and the approach that he has adopted is totally unsatisfactory. He has made his order needlessly verbose, in the process not deciding the vital issues at all. More importantly he has referred to materials, documents and judgments and there is no evidence that he ever shared the same with the petitioner before relying upon them. The basic requirement of principle of natural justice for sharing adverse material before utilising the same against a person must be observed with greater rigour in the times of availability of information on internet, all of which need not necessarily be accurate at all times. For each individual reason namely the order being unintelligible, the action failing the test of principles of natural justice and the Superintendent of Taxes exceeding the show-cause notice, the impugned orders must be set aside.