2022 (10) TMI 784 - HC - GST

Gross violation of principles of natural justice - Scrutiny of the GST returns filed by the petitioner - challenge to the impugned proceedings on the ground that the same stands vitiated, inasmuch as Rule 99 of the Tamil Nadu Goods Service Tax Rules, has not been complied with - HELD THAT - To a pointed question as to whether Form ASMT 10 which ought to have been issued in respect of aspects forming the subject matter of the proceedings in GST DRC-01 culminating in GST DRC-07 in view of the fact that the proceedings are pursuant to scrutiny of assessments, the learned Additional Government Pleader submitted that Form ASMT 10 was not issued other than the one issued on 22.12.2021, which does not cover the issues raised in the impugned proceeding. The learned Additional Government Pleader sought leave to issue notice in Form ASMT 10 in respect of the aspects forming the subject matter of the impugned proceedings and thereafter to assess in compliance with the procedure contemplated under the Act including Section 61. The matter is remitted back to the Assessing Officer for redoing the assessment. It is open to the Respondent to issue appropriate Form (Form ASMT 10) and after affording a reasonable opportunity to the petitioner in the manner contemplated under the Act proceed further in accordance with law - Petition allowed by way of remand.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Non-compliance with Rule 99 of the Tamil Nadu Goods and Service Tax Rules.
3. Discrepancies in GST returns and procedural lapses in issuing notices and orders.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner challenged the impugned order dated 09.05.2022 on the grounds of violation of principles of natural justice. The petitioner argued that the proceedings were conducted without their knowledge and they were unaware of the Show Cause Notice (SCN) in GST DRC-01 and the Order in GST DRC-07 until informed by the Respondent. The petitioner emphasized that neither the SCN nor the orders were served on them, which is a breach of natural justice. The court referenced a previous decision (W.P.No.27651 of 2021) which suggested that, due to technical difficulties in the GST system, notices and orders should be served through registered post or speed post with acknowledgment until technical issues are resolved.

2. Non-compliance with Rule 99 of the Tamil Nadu Goods and Service Tax Rules:
The petitioner contended that the impugned proceedings violated Rule 99 of the Tamil Nadu Goods and Service Tax Rules. This rule prescribes the method and manner for verifying the correctness of returns and addressing discrepancies. The court noted that the proper officer must scrutinize returns and inform the taxpayer of any discrepancies via Form ASMT 10, seeking an explanation. If the explanation is unsatisfactory, the officer may proceed with appropriate actions under Sections 65, 66, 67, 73, or 74 of the Act. In this case, although Form ASMT 10 was issued on 22.12.2021, the subsequent GST DRC-01 and GST DRC-07 were based on issues not covered in the original ASMT 10, thereby violating the prescribed procedure.

3. Discrepancies in GST Returns and Procedural Lapses:
The petitioner highlighted that the discrepancies noted in the impugned order were different from those mentioned in the Form ASMT 10 issued on 22.12.2021. The discrepancies included differences in turnover, input tax credit (ITC) issues, and demands under reverse charge, among others. The court observed that any proceeding culminating in an order under GST DRC-07, if initiated pursuant to scrutiny under Section 61, must be preceded by the issuance of Form ASMT 10. In this case, the discrepancies forming the subject matter of GST DRC-01 and GST DRC-07 were not covered in the original ASMT 10, rendering the entire proceedings invalid.

Judgment:
The court set aside the impugned order dated 09.05.2022 and remitted the matter back to the Assessing Officer for redoing the assessment. The Respondent was directed to issue the appropriate Form ASMT 10 covering the relevant discrepancies and, after affording a reasonable opportunity to the petitioner, proceed further in accordance with the law. The petitioner was also directed to cooperate in the proceedings. The Writ Petition was disposed of with no order as to costs, and the connected Miscellaneous Petitions were closed.