2024 (3) TMI 1219 - HC - GST

Validity Of Show cause notice - No reasonable opportunity provided - tax demand as a condition for remand - HELD THAT - On examining the show cause notice and impugned order, it is clear that the entire tax liability is with regard to disparity between the GSTR-3B and GSTR-2B returns. The petitioner has, albeit subsequent to the issuance of such order, explained that ITC was validly availed of by submitting documents in support thereof. Undoubtedly, the petitioner was negligent in not doing so upon receipt of the intimation and show cause notice. Nonetheless, if the explanation of the petitioner is valid, the interest of justice would be prejudiced unless the petitioner is provided an opportunity to explain the alleged disparity. Thus, albeit by putting the petitioner on terms, the impugned order calls for interference. Therefore, the impugned order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. W.P. is disposed of on the above terms.

Summary

Issues:
The petitioner challenges an order dated 06.10.2023, claiming lack of reasonable opportunity to contest the tax demand. The issues involve disparity between GSTR-3B and GSTR-2B returns, validity of ITC availed by the petitioner, and adherence to principles of natural justice.

Disparity between GSTR-3B and GSTR-2B returns:
The petitioner, a dealer of woven fabrics and readymade garments, received a show cause notice on 23.06.2023 regarding tax liability. The impugned order was issued due to disparity between the GSTR-3B and GSTR-2B returns. The petitioner later explained that the Input Tax Credit (ITC) was validly availed of, but failed to provide supporting documents initially. The court acknowledges the petitioner's negligence but emphasizes the importance of providing an opportunity to explain the alleged disparity to ensure justice.

Validity of ITC availed by the petitioner:
The petitioner, subsequent to the order, submitted documents supporting the valid availing of ITC. Despite the delay in providing this explanation, the court recognizes the potential validity of the petitioner's claim. It is deemed crucial to allow the petitioner a chance to clarify the situation to prevent prejudice to the interest of justice.

Adherence to principles of natural justice:
The respondent, through the Government Advocate, stated that the petitioner acknowledged receipt of the intimation and show cause notice. It was also mentioned that the petitioner was offered a personal hearing, indicating compliance with principles of natural justice. The court, while acknowledging this, emphasizes the need to ensure a fair opportunity for the petitioner to present their case effectively.

Judgment Summary:
The impugned order is quashed, with a condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner is granted the opportunity to submit a reply within this period. Upon receipt of the reply and the 10% remittance, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh assessment order within two months. The case is disposed of with no costs incurred, and related motions are closed accordingly.