2024 (2) TMI 1242 - HC - GST

Validity of assessment order - non GST supply - alleged mismatch between the GSTR-3B and GSTR-1 returns - indirect income - rent for commercial purposes. Alleged mismatch between GSTR-3B and GSTR-1 returns - HELD THAT - It is evident that the assessing officer accepted the explanation of the petitioner that there was no mismatch. The finding recorded thereafter that there was short payment of tax under IGST cannot be countenanced on account of the fact that this issue was not raised in the show cause notice pursuant to which the assessment order was issued. As regards this head of liability, it becomes necessary for the assessing officer to issue a fresh show cause notice. Non GST supply - HELD THAT - The assessing officer recorded that relevant documentary evidence such as invoices, ledger copy, agreement and debit notes were not produced. It is further recorded therein that the taxpayer had wrongly reported the claim under exempted category instead of non GST supplies. Tax liability with interest thereon and penalty should not have been imposed in these circumstances and, if necessary, the petitioner should have been called upon to produce additional documents to establish that it is a non GST supply. Indirect income - HELD THAT - The last relevant discrepancy relates to payment of rent for commercial purpose. The impugned order records the reply of the taxpayer that tax liability on rental payment to unregistered persons was duly discharged. In light of this submission, the assessing officer should have called for relevant documents before concluding that the petitioner had not discharged tax liability in such regard. Rent for commercial purposes - HELD THAT - The petitioner is permitted to submit any additional documents within a maximum period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a maximum period of two months thereafter. The impugned order is quashed and the matter is remanded for re-consideration.

Summary

Issues involved:
The judgment deals with the assessment order assailed regarding Discrepancy Nos.1, 2, 10, and 11, relating to non-GST supply, alleged mismatch between GSTR-3B and GSTR-1 returns, indirect income, and rent for commercial purposes.

Discrepancy No.1 - Non-GST supply:
The petitioner, engaged in textiles and as an authorized dealer of Hyundai Motor Vehicles, received trade discounts from suppliers. The petitioner's error was in reporting under the wrong column, resulting in tax, interest, and penalty imposition. The assessing officer failed to recognize that the discounts were non-GST supplies. The petitioner's explanation was supported by financial credit notes, but the assessing officer claimed relevant documents were not produced. The tax liability with interest and penalty should not have been imposed without further document verification.

Discrepancy No.2 - Mismatch in returns:
The assessing officer accepted no discrepancy between GSTR-3B and GSTR-1 returns for CGST and SGST but alleged a short payment of tax under IGST without raising the issue in the show cause notice. The court found this discrepancy unacceptable and suggested issuing a fresh show cause notice for this specific matter.

Discrepancy No.10 - Indirect income:
The petitioner submitted copies of service tax and GSTR-3B returns to prove disclosure of indirect income, contrary to the assessing officer's claim of no documentary evidence submission. The court found the assessing officer's conclusion untenable in the presence of submitted documents.

Discrepancy No.11 - Rent for commercial purposes:
Regarding rent payments, the petitioner stated tax liability was discharged for payments to unregistered persons under the RCM method. The assessing officer's conclusion that tax liability was not discharged lacked proper document verification. The court directed the assessing officer to request relevant documents before making such determinations.

Conclusion:
The High Court quashed the assessment order in relation to Discrepancy Nos.1, 2, 10, and 11, remanding the matter for reconsideration. A fresh show cause notice was advised for Discrepancy No.2, while the petitioner was allowed to submit additional documents for Discrepancy Nos.1, 10, and 11 within two weeks. The assessing officer was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh assessment order within two months. The case was disposed of without costs, and related motions were closed.