2024 (6) TMI 1168 - HC - GST

Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - rejection of petitioner's claim for ITC on the ground that the purchase falls within the scope of sub-section (5) of Section 17 of applicable GST enactments - HELD THAT - On perusal of the impugned order, it is evident that the tax proposal was in relation to wrongful availment of ITC in respect of the purchase of a motor vehicle on 31.08.2018. In the affidavit, the petitioner asserts that such purchase was in furtherance of business. In these circumstances, it is just and necessary to provide an opportunity to the petitioner to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 12.09.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.

Issues: Challenge to tax demand on grounds of lack of reasonable opportunity for contesting, rejection of Input Tax Credit claim, adherence to principles of natural justice, setting aside impugned order, providing opportunity for contesting tax demand.

In this judgment, the petitioner challenged an order dated 12.09.2023, arguing that they were not given a fair chance to contest a tax demand related to the purchase of a goods vehicle for their vegetable oil business. The petitioner claimed Input Tax Credit (ITC) for the purchase, but the order rejected this claim citing relevant GST enactments. The petitioner sought to establish the eligibility of the ITC claimed and agreed to remit 10% of the disputed tax demand for a remand. The respondent, represented by Mrs. K. Vasanthamala, contended that principles of natural justice were followed, including issuing notices and reminders for a personal hearing, although the petitioner's subsequent reply was not received before the impugned order.

Upon reviewing the impugned order, it was found that the tax proposal concerned the alleged wrongful availment of ITC for the motor vehicle purchase. The petitioner maintained that the purchase was for business purposes. Consequently, the court deemed it necessary to allow the petitioner an opportunity to contest the tax demand by setting aside the impugned order on the condition that 10% of the disputed tax demand be remitted within two weeks. The petitioner was granted the chance to submit a reply to the show cause notice within this period. Once the remittance was confirmed, the respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh order within three months from receiving the reply.

The judgment disposed of the writ petition on the specified terms without costs, and related motions were closed accordingly. The court's decision aimed to uphold the principles of natural justice while ensuring a fair opportunity for the petitioner to contest the tax demand on the merits of the case.

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