2024 (6) TMI 1085 - HC - GST

Violation of principles of natural justice - petitioner asserts that she was unable to respond to the show cause notice on account of personal difficulties - mismatch between the GSTR 1 statement and the GSTR 3B return - HELD THAT - It is evident that the confirmed tax proposal relates entirely to a mismatch between the GSTR 1 statement and the GSTR 3B return. Such proposal was confirmed because the petitioner did not reply to the show cause notice or attend personal hearing. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits. The impugned order dated 17.10.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% 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 - Petition disposed off by way of remand.

Summary

Issues: Breach of principles of natural justice, violation of statutory rules, mismatch between GSTR 1 and GSTR 3B returns

The judgment delivered by the High Court addressed the challenge against an order dated 17.10.2023 on the grounds of breach of principles of natural justice. The petitioner contended that personal difficulties prevented her from responding to the show cause notice, leading to the inability to defend the tax proposal on merits. The petitioner sought relief through a writ petition. The counsel for the petitioner argued that the action initiated based on a mismatch between the GSTR 1 statement and GSTR 3B returns violated statutory rules. The counsel expressed confidence that given an opportunity, the petitioner could demonstrate the tax proposal should be dropped and agreed to remit 10% of the disputed tax demand for remand.

The Government Advocate representing the respondent acknowledged the show cause notice and reminders preceding the impugned order. She clarified that Rule 88C of the Central Goods and Services Tax Rules, 2017 was not applicable to the current proceedings, emphasizing its relevance only for assessments post 07.01.2022. The impugned order confirmed the tax proposal due to the mismatch between the GSTR 1 statement and GSTR 3B return, as the petitioner did not respond to the show cause notice or attend the hearing. The court deemed it just and necessary to provide the petitioner an opportunity to contest the tax demand on merits, setting aside the order and remanding the matter for reconsideration with the condition of remitting 10% of the disputed tax demand within two weeks.

As a result, the petitioner was granted permission to submit a reply to the show cause notice within the specified period. Upon receiving the reply and verifying the payment of 10% of the disputed tax demand, the respondent was directed to afford a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months from the date of receiving the reply. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed, concluding the legal proceedings in the matter.