2024 (6) TMI 1155 - HC - GST

Violation of principles of natural justice - denial of a reasonable opportunity to contest the tax demand on merits - unaware of proceedings culminating in the impugned order - notice and orders were uploaded on the view additional notices and order tab of the GST portal and not communicated to the petitioner through any other mode - reversal of ITC - HELD THAT - On perusal of the impugned order, it is evident that the tax proposal pertained exclusively to supplies received from Kiran Distributors. The petitioner has placed on record copies of relevant invoices issued by the said supplier, the bank statement relating to payments made to such supplier and the relevant ledger account. In these circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 27.09.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.

Summary

Issues: Challenge of tax demand order on the ground of denial of reasonable opportunity to contest, reversal of Input Tax Credit (ITC) without proper evidence, sufficiency of notices and personal hearing opportunities provided.

Analysis:
1. The petitioner challenged an order dated 27.09.2023, alleging a lack of opportunity to contest the tax demand. The petitioner claimed ignorance of the proceedings leading to the order until their bank account was attached in March 2024, as the notifications were uploaded on the GST portal without direct communication. This raised concerns about the fairness of the process.

2. The petitioner's counsel argued that the reversal of Input Tax Credit (ITC) in the impugned order was based on non-existent records from the supplier, despite the petitioner possessing invoices, payment proof, and other supporting documents. The petitioner expressed readiness to pay 10% of the disputed tax demand as a condition for a review, emphasizing the ability to prove eligibility for ITC if given a chance.

3. The Additional Government Pleader for the respondents contended that the impugned order followed proper procedures, including notices in Form ASMT 10, a show cause notice, and opportunities for personal hearings. This highlighted the efforts made to involve the petitioner in the process before the final decision was made.

4. Upon reviewing the order, it was found that the tax proposal related specifically to supplies from a particular distributor. The petitioner provided relevant invoices, bank statements for payments, and ledger accounts to support their position. In the interest of justice, the court decided to set aside the order, subject to the petitioner remitting 10% of the disputed tax demand within two weeks and submitting a reply to the show cause notice. The tax authorities were directed to provide a reasonable opportunity for the petitioner to present their case and issue a fresh order within three months.

5. The judgment concluded by disposing of the case under the specified terms, with no costs imposed. The associated motions were closed, and the bank attachment resulting from the assessment order was lifted. The decision aimed to ensure fairness and due process in addressing the petitioner's concerns regarding the tax demand order.