Introduction
The Tamil Nadu Commercial Taxes Department has recently issued circular no. 8/2024, dated 29.08.2024 (‘circular’), providing significant guidance for adjudication orders under the Tamil Nadu Goods and Services Tax Act, 2017 (‘TNGST Act’). This circular emphasizes the critical importance of a well-drafted GST order issued by a proper officer (‘PO’), highlighting the qualities such orders must possess. These guidelines aim to enhance transparency, ensure compliance with the principles of natural justice, and foster trust within the GST regime. By ensuring clarity, logical reasoning, and consistency with legal precedents, the circular seeks to minimize litigation and safeguard public rights, thereby reinforcing the fairness and integrity of the GST adjudication process.
The circular, while highlighting the importance and qualities of a well-drafted GST Order issued by a PO, lays down the following guidelines:
Qualities of a Good GST Order
The circular highlights several key attributes that every GST adjudication order must possess:
Clarity and conciseness: The GST adjudication order must be clear and concise to ensure easy comprehension for the taxpayer, eliminate vagueness, and improve efficiency. The order must be well structured, and the language must be simple and comprehensible. It must be issued expeditiously after the conclusion of the proceedings to avoid undue delay.
Logical Reasoning: A well-reasoned order is one of the basic components of the principles of natural justice. Thus, even the GST adjudication order must adhere to the above and shall mandatorily contain the facts of the case, relevant applicable legal provisions and the rationale behind the decision taken. This will ensure that the orders are passed after considering material grounds and that the party affected by the order can file an appeal on those grounds.
Fairness, Impartiality, and Compliance with Legal Standard: To ensure and maintain the public's faith in such proceedings, all orders must be free from bias or prejudice. They should also adhere to the legal standards established under the TNGST Act and Rules.
Consistency with Precedents: Precedents are an important source of law, and they must be considered while passing orders to ensure consistency, credibility, and clarity regarding the matter at hand. Hence, consistency with well-established precedents in GST is one of the key aspects of a well-drafted adjudication order.
Just and Equitable Outcome with Clarity on Remedies: A well-drafted adjudication order must demonstrate that all the issues involved have been dealt with just and equitably. Further, if an order is passed granting remedies, it must define the nature and extent of those remedies, like refund details, adjustments, etc. If any cost is imposed, then the order shall contain an explanation of the method used for its calculation.
Protection of Rights: The basic rationale behind any order being passed under the TNGST Act and Rules by any officer is the protection of rights under the Constitution and the TNGST Act. Hence, an adjudication order must ensure the above.
Finality and Enforcement: Another quality of a well-drafted order is that it states whether the order is subject to appeal. If so, the authority before it is to be filed and the time limit must also be mentioned. In addition, the order must also state the mechanism for enforcing its decisions.
Role of Adjudicating Authority ('AA')
The circular reiterates the AA's role under the TNGST Act. The authority must issue a 'speaking order' that is well-reasoned, logical, and adheres to the principles of natural justice.
The three principles of natural justice are:
Nemo Judex In Causa Sua or Rule Against Bias: This principle highlights the well-settled rule that no one should be made a judge of his own cause. To ensure fairness and justice, the judge is expected to be impartial and independent and not in any way connected with the parties or issues involved in the case, whether directly or indirectly.
Audi Alteram Partem or Rule of Fair Hearing: This principle means that no one should be condemned unheard. The Right to a Fair Hearing is a legal guarantee and must be followed mandatorily. It includes the right to notice, the right to present the case and evidence, the right to cross-examination, and the opportunity to be heard.
Rule of Speaking Order or Reasoned Order: The third component of natural justice requires that an order be passed along with the rationale behind that decision. This is also known as speaking order or reasoned order, as it speaks for itself. It is important as it allows the affected parties to understand the basis of the ruling so that they are given an opportunity to challenge it if necessary.
General contents expected in a Show Cause Notice (SCN)
The circular provides guidance on the structure and contents of a SCN, which initiates adjudication proceedings:
Brief introduction of the assessee and the nature of their business.
Relevant provisions and the issues in question.
Records and evidence relied upon.
Value of supply, applicable tax, interest, and penalties, along with calculations.
HSN/SAC code for the relevant goods or services.
Points to be noted before Issuance of Orders
The PO shall ensure that all the components of natural justice have been followed and that the assessee is afforded reasonable time to show cause against the proposal. Further, if the assessee requests copies of documents relied upon by the authority for cross-examination, the same shall be considered and awarded to him. However, requests for adjournments shall be granted based on their merit. The PO must also ensure that the request for an appearance by the authorized representative is considered and granted where necessary.
General Contents of a Model Order Arranged in Logical Sequence
The circular suggests a logical format for drafting adjudication orders under GST:
The full address of the authority is along with an email and phone number.
Statutory provisions which give the authority to pass the order.
References in chronological order, e.g. returns, statement of audit, audit reports, etc.
Name and Address, GSTIN and brief business practice of the assessee and the year to which the order is related.
A bilingual preamble in Tamil and English.
Contents of notice.
Assessee’s reply.
Personal hearing.
Brief discussion on the issues.
Judgements, if any, cited shall be discussed in dept relating to the issue.
Tax Liability calculation.
Mention the Appellate Authority and the limitation period for filing an appeal.
Conclusion
In conclusion, the circular highlights the need for clarity, fairness, and adherence to natural justice in drafting GST adjudication orders. By following these guidelines, POs can enhance transparency, minimize litigation and foster trust in the GST regime. This circular provides a framework for improving the quality of adjudication orders, ensuring consistency with legal standards and protecting taxpayer rights. The guidelines outlined in this circular aim to streamline the adjudication process and safeguard against arbitrary decisions, thereby promoting a fair and equitable tax environment.
Authored by Sweta Singh, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.