2024 (2) TMI 856 - HC - GST

Validity of assessment order - impugned assessment order was issued without considering the petitioner's replies and that such orders disclose non-application of mind - violation of principles of natural justice - HELD THAT - The impugned assessment order records the finding that the tax payer did not clarify whether the director is a whole time director, independent director or part time director. It is further recorded therein that the company did not clarify whether such director was paid salary. On examining the reply dated 15.06.2023 of the petitioner, the petitioner has stated categorically that remuneration was paid to Dinesh Victor, Managing Director of the company. In view of such reply, the conclusion that the petitioner did not clarify the category of directorship is unsustainable. Material documents such as the employment contract, if any, or the terms of employment, TDS deduction particulars and the like were, however, not submitted by the petitioner. Miscellaneous expenses - HELD THAT - The imposition of tax, penalty and interest on the basis of the total expenditure incurred towards advertisement and business promotion, repairs and maintenance, and computer and software maintenance, by drawing on figures provided in the respective financial statement is a conclusion reached without proper application of mind. Exempted turnover - reliance placed on N/N. 12/2017 - HELD THAT - In spite of the petitioner's replies to such effect, the Assessing Officer recorded the bizarre conclusion that the petitioner was engaged in the sale of painting and art works. These conclusions indicate non application of mind to the material placed on record. Hence, the orders impugned herein warrant interference. This matter is remanded for reconsideration by the Assessing Officer. The petitioner is directed to submit all relevant documents within a maximum period of two weeks from the date of receipt of a copy of this order - petition allowed by way of remand.

Summary

Issues involved: Challenge to assessment orders for assessment years 2017-18 regarding director's remuneration, miscellaneous expenses, and exempted turnover.

Director's remuneration: The petitioner challenges the assessment order stating that it did not consider the replies provided. The petitioner argues that the remuneration paid to the managing director is exempt from GST under relevant provisions. The court finds that the petitioner did clarify the payment of remuneration to the managing director, but failed to submit material documents such as employment contract or TDS details.

Miscellaneous expenses: The assessment order imposed liabilities on expenses without proper examination of suppliers' registration status or applicability of exemption notifications. The petitioner relied on notifications exempting registered persons from GST under certain conditions. The court concludes that the imposition of tax, penalty, and interest on expenses was done without proper application of mind.

Exempted turnover: The petitioner claimed exemption under a specific notification related to training in art and culture. However, the Assessing Officer concluded that the petitioner was engaged in the sale of paintings and art works, indicating a lack of consideration for the material provided. The court finds that the assessment order did not properly consider the petitioner's submissions on exempted turnover.

Judgment: The court allows the writ petition, quashing the impugned orders and remanding the matter for reconsideration by the Assessing Officer. The petitioner is directed to submit all relevant documents within two weeks. The Assessing Officer is instructed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue fresh assessment orders within two months from receiving the documents. No costs are awarded in this matter.