2024 (4) TMI 655 - HC - GST

Denial of Input Tax Credit (ITC) - Proof of movement of Goods (E-way bill) not produced - Validity of Order passed - No reasonable opportunity to contest the tax demand - show cause notice issued alleging that the petitioner had wrongly availed of Input Tax Credit (ITC) - HELD THAT - On perusal of the petitioner s reply it appears that the petitioner submitted original tax invoices the ledger account pertaining to the supplier concerned bank statement and relevant GSTR returns. The petitioner does not appear to have submitted e-way bills lorry receipts weighment slips and the like to establish actual movement of goods. On examining the impugned order it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner which include the bank statement showing payments made to the supplier the GSTR 2A indicating the availability of ITC it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand however it is also necessary to put the petitioner on terms. Thus the impugned order dated 30.08.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 20% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit additional documents within the aforesaid period to establish actual movement of goods. Upon receipt of additional documents from the petitioner and on being satisfied that 20% of the disputed tax demand was received the 1st respondent is directed to provide a reasonable opportunity to the petitioner including a personal hearing and thereafter issue a fresh order within two months from the date of additional documents from the petitioner. As a consequence of the impugned order being set aside the order of attachment is raised. The writ petition is disposed of on the above terms without any order as to costs. Consequently connected miscellaneous petitions are closed.

Summary

Issues involved:
The petitioner challenges an order dated 30.08.2023, claiming lack of opportunity to contest the tax demand on merits.

Details of the judgment:
1. The petitioner received a show cause notice for the tax period 2018-2019 regarding alleged wrongful availing of Input Tax Credit (ITC). The petitioner replied with supporting documents, but the impugned order was issued without providing a reasonable opportunity for the petitioner to contest.

2. The petitioner, through counsel, argued that she was unaware of the impugned order as GST compliances were managed by her tax consultant. The order was only noticed upon receiving an attachment order related to her bank account.

3. The petitioner seeks another chance to present relevant documents and contest the tax claim on merits, agreeing to remit 20% of the disputed tax demand as a condition for remand.

4. The Government Advocate pointed out that three reminders for personal hearings were issued to the petitioner after her initial reply. However, the petitioner did not submit documents to establish the actual movement of goods.

5. Upon review, it was found that the petitioner had submitted various documents but lacked proof of actual movement of goods like e-way bills and weighment slips. The impugned order was set aside, and the petitioner was given a chance to produce additional documents to prove the movement of goods.

6. The matter was remanded for reconsideration with the condition of remitting 20% of the disputed tax demand within two weeks. The petitioner could submit additional documents to establish the movement of goods, and the 1st respondent was directed to provide a reasonable opportunity for a personal hearing and issue a fresh order within two months.

7. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed as a consequence of setting aside the impugned order.