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2024 (6) TMI 1164 - HC - GSTViolation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - reversal of Input Tax Credit to the extent of credit notes issued by the petitioner's suppliers - HELD THAT - On examining the impugned order, it is evident that the tax proposal relates to the credit notes reflected in the auto populated GSTR 2A. Learned counsel for the petitioner submits that Input Tax Credit was not availed of for the value of such credit notes. By taking the said submission into account and the assertion that the petitioner did not participate in proceedings on account of not being aware of the same, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits. In this connection, it should be noticed that the petitioner remitted 12.5% of the disputed tax demand while filing the appeal. The impugned order dated 23.08.2023 is set aside and the matter is remanded for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand.
Issues Involved: Challenge to tax demand due to lack of reasonable opportunity for contesting, validity of show cause notice, availability of Input Tax Credit, procedural fairness in tax proceedings.
Analysis: 1. The writ petition challenged an order dated 23.08.2023 on the grounds of lack of a reasonable opportunity to contest the tax demand. The petitioner claimed ignorance of a show cause notice dated 27.06.2023, leading to a bank attachment notice for tax recovery. The petitioner filed an appeal, making a pre-deposit of 12.5% of the tax demand, which was rejected on grounds of limitation, prompting the writ petition. 2. The petitioner's counsel argued that the supplier issued invoices and credit notes to cancel them, asserting that Input Tax Credit was not availed for the value of these credit notes. The petitioner sought an opportunity to demonstrate that only eligible Input Tax Credit was utilized, emphasizing the need for a fair hearing. 3. The Government Advocate for the respondent acknowledged the sequence of notices preceding the impugned order, including Form ASMT 10 dated 17.05.2023 and a show cause notice dated 27.06.2023, highlighting that a personal hearing was offered to the petitioner before the order was issued. 4. Upon examining the impugned order, it was noted that the tax proposal related to credit notes in the auto-populated GSTR 2A. The petitioner's counsel contended that Input Tax Credit was not utilized for these credit notes, and due to the petitioner's lack of awareness, justice demanded an opportunity to contest the tax demand on merits. The petitioner had already deposited 12.5% of the disputed tax amount while filing the appeal. 5. Consequently, the High Court set aside the order dated 23.08.2023 and remanded the matter for reconsideration. The petitioner was granted fifteen days to respond to the show cause notice, after which the respondent was directed to provide a fair opportunity for a personal hearing and issue a fresh order within three months. The remittance made by the petitioner was to abide by the outcome of the proceedings, and the bank attachment was lifted due to the assessment order being set aside. 6. The writ petition was disposed of with no costs, and related motions were closed as per the terms outlined in the judgment, ensuring procedural fairness and an opportunity for the petitioner to contest the tax demand on merits.
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