2024 (6) TMI 1165 - HC - GST

Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - petitioner was unaware of proceedings and therefore could not participate in the same - mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT - On examining the impugned assessment order, it is evident that the tax proposal related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. Such proposal was confirmed on account of the petitioner not filing the reply to the show cause notice. By taking into account the assertion that the petitioner could not participate in proceedings on account of being unaware of such proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 28.12.2023 is set aside 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. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.

Issues: Challenge to tax demand due to lack of opportunity for contesting, compliance with principles of natural justice, mismatch in GSTR returns, setting aside the assessment order.

Analysis:

1. Lack of Opportunity for Contesting Tax Demand: The petitioner challenged the order dated 28.12.2023 on the grounds of not being provided a reasonable opportunity to contest the tax demand on its merits. The petitioner claimed to be unaware of the proceedings and, therefore, could not participate. The court acknowledged the petitioner's assertion and deemed it necessary in the interest of justice to provide an opportunity to contest the tax demand on merits.

2. Mismatch in GSTR Returns: The tax proposal in question was related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. The petitioner's counsel expressed confidence that if given an opportunity, they could demonstrate that only eligible Input Tax Credit (ITC) was claimed. The court considered this submission and directed the petitioner to remit 10% of the disputed tax demand as a condition for remand.

3. Compliance with Principles of Natural Justice: The Additional Government Pleader representing the respondent contended that the principles of natural justice were duly complied with by issuing a show cause notice on 29.09.2023 and sending three reminders for personal hearings. This submission was accepted by the court as evidence of procedural fairness in the case.

4. Setting Aside the Assessment Order: Upon examining the impugned assessment order, which confirmed the tax proposal due to the petitioner's failure to reply to the show cause notice, the court found it necessary to set aside the order. The court emphasized that since the petitioner was unaware of the proceedings, it was imperative to provide an opportunity to contest the tax demand on merits by imposing certain conditions, including remittance of a portion of the disputed tax demand.

5. Final Decision: The court set aside the order dated 28.12.2023 on the condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner was allowed to submit a reply to the show cause notice within this period. Upon satisfaction of the remittance and receipt of the reply, the respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh order within three months. The court also ordered the raising of the bank attachment due to the setting aside of the assessment order.

In conclusion, the writ petition was disposed of with the above terms, and no costs were imposed. The connected miscellaneous petitions were closed accordingly.

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