1. In taxation law, no liability to pay tax arises unless and until an assessment is framed. Parliament has followed same principle in GST laws. The scheme has been so framed that the determination of tax liability is done in a proper manner affording proper opportunity of hearing to the assesse.

  2. If the person is an unregistered person, the authority can proceed to assess the tax liability of such taxable person to the best of his judgement for the relevant tax periods and issue an assessment order. However, such an assessment order can’t be passed without giving a person concerned a proper opportunity of being heard.

  3. Every registered person, if he does not file returns as per applicable periodicity or, annual return or final return, section 46 mandatorily requires the Notice to be issued for furnishing such returns. If, even after such notice the returns are not filed, the authority may proceed to assess under section 62 the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order.

  4. Section 61 makes it compulsory for the authorities to inform the registered person, who has filed the returns, any discrepancy found in any of the returns so filed and seek an explanation from him. If the explanation is not offered within 30 days or the explanation so offered is not found satisfactory or having accepted the discrepancy the corrective steps are not taken by the said registered person then the authorities can initiate action such as audit by the tax authorities, special audit, inspection, search and seizure. The authorities can also proceed to determine the tax not paid or short paid.

  5. If audit of such a registered person is undertaken by the tax authorities, then on conclusion, the authorities have to mandatorily inform, within 30 days, to that registered person their findings. The said person is also to be informed his rights and obligations and the reasons for such findings. The action for determination of tax liability under section 73 or 74 can be initiated only after the detection of tax liability, as a result of the audit, is informed to such person.

  6. If the special audit is conducted under section 66 by the nominated Chartered Accountant or Cost Accountant, then the registered person is required to be given an opportunity of hearing in respect of any material gathered on the basis of special audit which is proposed to be used in any proceeding against him under the GST Act and Rules.

  7. If the authorities have reason to believe that a taxable person has suppressed any transaction or, the goods supplied have escaped the payment of tax or, the person has evaded or is attempting to evade the payment of any tax, then the powers of inspection, search and seizure can be used and the authority may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him. However, he should grant receipt for the same, and can retain the same for so long as may be necessary in connection with any proceedings under the GST of the rules made thereunder for prosecution.

  8. Under section 73, the authorities can determine the tax not paid or short paid or erroneously refunded or input tax credit wrongfully availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts. After noticing such a default, the authority has to issue a Notice. The person chargeable to tax, if is not willing to accept the default and pay the tax with interest, can make the representation. The authority after considering the representation has to pass the order.

  9. If the non-payment of tax or the short payment of tax or the erroneous refund thereof or the availment of wrong input tax credit or utilisation thereof is by reason of fraud or any wilful misstatement or suppression of facts then the determination of tax arising on account of such default shall be under section 74 of the GST Act. Even under this provision the authority has to consider the representation of the person charged with the default, if the same is not acceptable to him, and pass the order.

  10. Section 75 lays down general provisions relating to determination of tax. Sub-section (4) thereof says that an opportunity of hearing should be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

  11. Sub-section (5) thereof says that on sufficient cause being shown maximum three adjournments can be granted for hearing.

  12. Sub-section 7 of Section 75 is more important. It says that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.

  13. Section 78 is equally important It says, any amount payable by a taxable person in pursuance of an order passed under the Act should be paid by such person within a period of 3 months from the date of service of such order, failing which recovery proceedings would be initiated. In other words, the Parliament has granted 3 months’ time to the person against whom the order is passed to challenge such order before the higher forum if the same is not acceptable to him..

  14. Thus, in every provision of the GST Act the rules of natural Justice have been incorporated. However, while administering these laws those principles are not being followed. The authorities always endeavour to extract the revenue flouting all such principles. The coercive measures of recovery are adopted. This is more particularly so when surprise visits are paid under Section 67.

  15. The authorities invariably by force obtain a confession form the assessee at the time of such visit and use it in further proceedings. The Supreme Court has always condemned this practise of obtaining confession by force and has warned that it requires close scrutiny and independent corroboration and should not be accepted unless it is proved that it is made voluntarily. See Mohate Sham Mohd. Ismile v. Special Director, Enforcement Directorate, 2007 (220) ELT 3 (SC).Further the confession should be in writing and not verbal and the copy thereof should be given to the assessee. See Ambalal v. Union of India, 1983 (13) ELT 1321. If the confession is not voluntary, it should be at the earliest possible time should be retracted. The burden of proving that the confession is voluntary is always on the revenue. See Vinod Solanki v. Union of India and Others, 2009 (233) ELT 157.

  16. After obtaining such confession under duress the next coercive action is always to make provisional attachment under section 83 of the Act. Such Section 83 can be brought into operation only if the Commissioner is of the opinion that for the purpose of protecting the interest of the government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property belonging to a taxable person. Thus, the power of provisional attachment is to be exercised only after passing speaking order of the satisfaction of the Commissioner about the loss of revenue in future if the property is not provisionally attached. The Courts have vacated such orders where they have found that either the orders are not speaking or the reasons given are not adequate.

  17. In Goenka & Associates Educational Trust, 2008 (9) STR 228 (BH)the petitioner was contesting their liability about the registration and consequent liability under the Service Tax as the Tour Operator. The Court was prima facie convinced about their contention and passed order protecting them from any coercive recovery till adjudication.

  18. In Keyur Shah v. Union of India, 2014 (306) ELT 603 (BH)a communication was sent to Co-operative Housing Society attaching the property of the assessee and insisting for NOC form the Department before transfer of the property. The Court quashed the communication since no adequate reasons were stated therein.

  19. In ICICI Bank v. Union of India, 2015 (38) STR 907 (BH)the petitioner had filed the return declaring that they were not liable to Service Tax. However, they paid the tax under protest upon receiving the communication from the Department. After receiving such tax under protest, the Department sent another communication for interest. They were also threatened of drastic action like attachment of property sealing bank account etc. The Court expressed displeasure with such threatening and held that the if the stand taken by the petitioner was not acceptable to the revenue then they should have determined (assessed) the liability on the basis of the return filed.

  20. Cavim Properties Pvt. Ltd. v. Union of India, 2016 (44) STR 217( BH). In this case the Court set aside the attachment of property including bank account directing the adjudication be done and reasoned order be passed.

  21. M. P. Enterprises v. Union of India, 2018 (19) GSTL 493 (BH).In this case the Garnishi Notices attaching the bank accounts were vacated Notices issued to third parties were also quashed.

  22. However, where the assessee has revised his returns pursuant to pressure by Revenue officers, he must immediately file a refund application and simultaneously retract any statement or confession which is given. It may so happen in some cases that the limitation period for claiming refund is over. In such cases, one can move the High Court in writ jurisdiction. However, it is always advisable that where the limitation for refund is over, the taxpayer should not revise the return without proper legal advice.

  23. Another trend which is seen nowadays is to levy interest on self-assessed tax shown in return without giving any opportunity of being heard. This is also clearly wrong. Interest may be an automatic liability, but it cannot be said that there can be no error of law or fact in the working of the interest. As such, the assessee must be heard before finalising the levy of interest even on self-assessed tax.

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