2024 (6) TMI 1088 - HC - GST

Breach of principles of natural justice - petitioner was unaware of proceedings culminating in the impugned order - wrongful availment of Input Tax Credit (ITC) - HELD THAT - It appears that the GST proposal pertains to the availment of ITC after specifying amounts in the reverse charge column in the GSTR 3B returns. It is also noticeable that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. In these circumstances, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned orders dated 31.10.2023 are set aside, subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues:
Breach of principles of natural justice in GST registration cancellation and confirmed tax proposal related to Input Tax Credit (ITC) due to errors in GSTR 3B returns.

Analysis:
The judgment concerns the challenge to an order dated 31.10.2023 on the grounds of breach of principles of natural justice. The petitioner, a trader in leather goods, had its GST registration cancelled on 14.10.2020, leading to unawareness of the proceedings culminating in the impugned order. The confirmed tax proposal revolves around the alleged wrongful availment of Input Tax Credit (ITC) due to an inadvertent error in filling up the GSTR 3B returns, where amounts were specified incorrectly. The petitioner agrees to remit 10% of the disputed tax demand for each assessment period as a condition for remand.

The Government Advocate, representing the respondents, asserts that the principles of natural justice were adhered to by issuing a show cause notice on 11.09.2023 and offering a personal hearing to the petitioner on 14.09.2023. However, upon perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner failed to respond to the show cause notice or attend the personal hearing. To ensure justice, the court sets aside the impugned orders subject to the condition that the petitioner remits 10% of the disputed tax demand for each assessment period within two weeks of receiving the order. The petitioner is also granted the opportunity to submit a reply to the show cause notice within the specified period.

Consequently, the court directs the respondent to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue fresh assessment orders within three months from the date of receiving the petitioner's reply. The writ petitions are disposed of with no costs, and related miscellaneous petitions are closed as per the terms outlined in the judgment.