2024 (5) TMI 173 - HC - GST

Validity of assessment order - non-speaking assessment order - non-application of mind - violation of principles of natural justice - reversal of ITC - HELD THAT - On examining the impugned order, it is evident that the tax liability of the petitioner under about '7' heads was determined therein. As regards turnover mismatch, the assessing officer set out the particulars provided by the petitioner, recorded that the petitioner had produced the balance sheet and profit and loss account for the year 2017-2018 and thereafter recorded the following conclusion The reply of the dealer is not acceptable . Thus, the assessing officer has merely recorded a conclusion in the nature of ipse dixit without any reasoning to support such conclusion. Reversal of ITC - HELD THAT - The assessing officer has recorded the conclusion that ITC was used partly for effecting taxable supplies and partly for effecting exempt supplies. The latter conclusion appears to be clearly contrary to the submissions made by the assessee. As regards tax liability under the head 'sundry creditors', the petitioner/assessee stated that the payments to creditors are below 180 days and Rule 37 was not contravened. It was further stated that no ITC was involved. The reply of the assessee dated 09.10.2023 clearly discloses that the sundry creditors' list, payment date, bank date and bank statement were enclosed. Without considering these documents, a finding that bank statement was not provided is recorded in the impugned order. It appears that the impugned order was issued without taking into account the relevant material placed on record by the assessee. Consequently, the said order calls for interference and is hereby quashed. The matter is remanded for reconsideration by the assessing officer. After providing a reasonable opportunity, including a personal hearing, to the assessee, the assessing officer is directed to issue a fresh assessment order within a maximum period of two months from the date of receipt of a copy of this order - petition disposed off by way of remand.

Summary

Issues involved:
The assessment order challenged as non-speaking due to lack of reasoning and application of mind.

Details of the judgment:
The petitioner, engaged in wholesale and retail trading of grocery and agricultural produce, received an audit notice pointing out defects in returns. Despite dropping proceedings for some defects, a show cause notice was issued for the assessment year 2017-2018. The impugned order confirmed the proposal in the notice and imposed a penalty. The petitioner contended that the order lacked reasoning and application of mind.

The petitioner's counsel argued that the impugned order showed complete non-application of mind and lacked reasoning. Specific examples were cited, such as the turnover mismatch, reversal of Input Tax Credit (ITC), and treatment of sundry creditors. The assessing officer's conclusions were deemed unreasonable based on the petitioner's submissions.

The Additional Government Pleader refuted the claim of lack of personal hearing, stating that the petitioner was provided with multiple personal hearings.

Upon examination, it was found that the impugned order determined the petitioner's tax liability under various heads without proper reasoning. For instance, in the case of turnover mismatch, the assessing officer simply stated that the dealer's reply was not acceptable without providing any supporting reasoning.

Regarding the reversal of ITC, the assessing officer's conclusion contradicted the petitioner's submission that ITC was used exclusively for taxable and zero-rated supplies. Similarly, in the case of sundry creditors, relevant documents provided by the petitioner were not considered before reaching a conclusion.

Consequently, the impugned order was set aside for failing to consider the material placed on record by the assessee. The matter was remanded for reconsideration by the assessing officer with directions to issue a fresh assessment order within two months, providing the assessee with a reasonable opportunity and a personal hearing.

The writ petition was disposed of with no order as to costs, and connected miscellaneous petitions were closed.