2024 (6) TMI 1157 - HC - GST

Violation of principles of natural justice - denial of a reasonable opportunity to contest the tax demand on merits - petitioner was unable to respond to the show cause notice or participate in personal hearings on account of various personal difficulties - mismatch between the petitioner's GSTR 1 statement and GSTR 3B returns - HELD THAT - On perusal of the impugned order, it is evident that the tax proposal pertained to a mismatch between the petitioner's GSTR 1 statement and GSTR 3B returns. Such order records that the tax proposal is confirmed because the petitioner did not reply to the show cause notice. In the facts and circumstances outlined above, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits, by putting the petitioner on terms. The order impugned dated 30.12.2023 is set aside subject to the 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. In the said period, the petitioner is permitted to file a reply to the show cause notice - Petition disposed off.

Summary

Issues:
1. Denial of reasonable opportunity to contest tax demand on merits.
2. Applicability of Rule 88C of the Central Goods and Services Tax (CGST) Rules.
3. Setting aside the impugned order and providing an opportunity to contest the tax demand.

Analysis:

1. The judgment addresses the issue of the denial of a reasonable opportunity to contest the tax demand on merits. The petitioner claimed the inability to respond to the show cause notice or participate in personal hearings due to personal difficulties. The court noted the breach of Rule 88C of the CGST Rules alleged by the petitioner. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand, indicating a willingness to resolve the matter amicably.

2. The respondent, represented by Mr. T.N.C. Kaushik, argued that the impugned order followed proper procedure with a notice in Form ASMT-10 and a show cause notice. It was contended that Rule 88C was not applicable to the case. The court considered these arguments but ultimately found that the interest of justice required providing the petitioner with an opportunity to contest the tax demand on merits.

3. Upon perusal of the impugned order, which highlighted a mismatch between the petitioner's GSTR 1 statement and GSTR 3B returns leading to the confirmation of the tax proposal due to the petitioner's failure to reply to the show cause notice, the court decided to set aside the order. The court directed the petitioner to remit 10% of the disputed tax demand within two weeks and allowed the petitioner to file a reply to the show cause notice. Once the remittance was confirmed, the respondent was instructed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.

Overall, the judgment in W.P.No.12682 of 2024 was disposed of with the condition of remitting 10% of the disputed tax demand and providing an opportunity to contest the tax demand on merits. The judgment clarified the procedural aspects, addressed the petitioner's concerns, and ensured a fair resolution of the tax dispute.