Tax assessment orders must adhere to principles of natural justice, ensuring all relevant issues are communicated to the concerned parties prior to decision-making.

An assessment order dated 28.03.2024 is the subject of challenge in this writ petition.

2. The petitioner received a show cause notice dated 28.12.2023 in respect of the 10 issues set out in internal pages 65 & 66 of the show cause notice. Such show cause notice was replied to on 05.02.2024. Pursuant to a personal hearing, impugned order dated 28.03.2024 was issued. By such order, upon considering the petitioner's reply and submissions made during the course of personal hearing, four issues were dropped.

3. The first ground on which learned counsel for the petitioner assails the impugned order is that two new issues were dealt with and the tax proposals relating thereto were confirmed in the impugned order. The first of these issues relates to expenses incurred towards staff welfare. The second issue relates to rejection of input tax credit (ITC) by invoking sub section 5 of Section 17 of applicable GST enactments. Since the petitioner was not provided an opportunity to show cause notice in respect of these two issues, learned counsel contends that principles of natural justice were violated. Even as regards the issue relating to ITC reversal under Rule 42, learned counsel submits that the show cause notice proceeded on the basis that the petitioner had availed of ITC in respect of exempted supplies and was required to reverse ITC to that extent. In the impugned order, she points out that the assessing officer also imposed taxes on the sale of secondhand/old vehicles by treating it as taxable supply. Learned counsel contends that these two conclusions are contradictory and incompatible.

4. With regard to supply to SEZ, learned counsel contends that the notification requiring an endorsement on the invoices from the authorized officer of the SEZ was introduced by a notification which was not in force at the relevant point of time. She submits that such notification was effective from 01.10.2023. Without taking this aspect into account in spite of the petitioner's reply dated 30.01.2024, which referred to the date of entry into force of the notification, she submits that the tax proposal was confirmed to the extent that endorsed invoices were not provided by the petitioner. She also submits that tax liability was confirmed in respect of CSR activities carried on on pan-India basis by drawing on particulars set out in the consolidated financial statements of the petitioner. For all these reasons, learned counsel submits that the matter requires reconsideration.

5. Mr.C.Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. He submits that two additional issues are dealt with in the impugned order because such issues arose out of the reply of the petitioner. As regards these issues, he submits that the impugned order may be treated as a show cause notice and the petitioner be provided an opportunity to respond thereto. On all other issues, learned counsel submits that the principles of natural justice were complied with and the petitioner's reply was duly considered. Consequently, he submits that no case is made out for interference.

6. On comparing the show cause notice and the impugned order, it is evident that issues relating to staff welfare expenses and ineligible ITC as per sub-section 5 of Section 17 of applicable GST enactments were not raised in the show cause notice. To that extent, principles of natural justice were contravened. In the show cause notice, the issue relating to non-reversal of ITC for exempted supplies was dealt with and the petitioner was called upon to show cause in that respect. While the impugned order deals with the said issue, such order proceeds to also conclude that sale of old/used vehicles is liable to tax as a taxable supply. As contended by learned counsel for the petitioner, these conclusions are incompatible and contradictory.

7. With regard to supplies to SEZ, the petitioner relied upon reply dated 30.01.2024 wherein the respondent was informed that the requ