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2024 (3) TMI 1276 - HC - GSTImposition of GST on trade payables - challenge on the ground that the impugned order travelled beyond the scope of the show cause notice and the entire trade payables of the petitioner were subject to GST - Violation of principles of natural justice - HELD THAT - It appears that the petitioner operates across India and the total trade payables were taken by the respondents from the financial statements of the petitioner. In the reply to the show cause notice the petitioner had explained that the statutory requirements with regard to availment of ITC had been fulfilled by making payments for goods or services received by the petitioner within the time limit specified in that regard. The petitioner also adverted to returns filed in Form GSTR 1 and GSTR 3B in that regard - the conclusion in the impugned order that GST is payable on the total taxable supply as per the financial statements of the petitioner appears prima facie to be untenable. Since it was concluded earlier that the findings with regard to imposition of GST on trade payables by treating the total tax payables as taxable supplies is prima facie untenable the petitioner shall remit 10% of the disputed tax demand pertaining to all the other heads of demand under the impugned order as a condition for remand. The impugned order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand under all heads except trade payables within two weeks from the date of receipt of a copy of this order - Petition disposed off.
Issues involved:
Challenge to order u/s 226 of the Constitution of India regarding imposition of GST on trade payables. Detailed Judgment: Issue 1: Scope of Show Cause Notice The petitioner, a registered person under GST enactments in Tamil Nadu, challenged an order dated 31.12.2023, arguing that it exceeded the scope of the show cause notice issued on 30.09.2023, which was limited to a proposed tax of Rs. 43,66,708.14. The impugned order imposed GST on the total trade payables of Rs. 85,58,12,375, leading to a tax liability exceeding Rs. 90 crores. The petitioner contended that GST was wrongly imposed despite compliance with Input Tax Credit (ITC) regulations. The respondents did not provide sufficient reasons for their conclusions, according to the petitioner. Issue 2: Imposition of GST on Trade Payables The petitioner's main contention was the imposition of GST on trade payables, which were considered taxable supplies by the respondents based on financial statements. The petitioner had fulfilled ITC requirements by making timely payments for received goods or services, as evidenced by returns filed. The impugned order's conclusion that GST was payable on the total taxable supply from financial statements was deemed questionable. Issue 3: Reconsideration of Impugned Order The Court found merit in the petitioner's arguments regarding the imposition of GST on trade payables and other tax heads. It quashed the impugned order conditionally, requiring the petitioner to remit 10% of the disputed tax demand under all heads except trade payables within two weeks. The respondents were directed to provide a reasonable opportunity for the petitioner to present their case and issue a fresh order within two months, considering all contentions raised. Conclusion The High Court of Madras quashed the impugned order subject to the petitioner complying with the condition to remit 10% of the disputed tax demand under all heads except trade payables. The Court emphasized providing the petitioner with a fair opportunity to present their contentions and directed the issuance of a fresh order within two months. No costs were awarded, and connected miscellaneous petitions were closed.
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