2024 (6) TMI 1308 - HC - GST

Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - cancellation of GST registration - HELD THAT - The petitioner has placed on record evidence that his GST registration was cancelled on 21.10.2020 with effect from 31.12.2017. In those circumstances, the submission that the petitioner was not monitoring the portal is not entirely devoid of merits. At the same time, it is noticeable that the petitioner was put on notice about the discrepancies in returns by issuing notice in Form ASMT 10. In these circumstances, it is just and necessary to provide an opportunity to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 31.12.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of three weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.

Summary

Issues:
Challenge to tax demand due to lack of reasonable opportunity for contesting, Compliance with principles of natural justice, Remand for reconsideration with condition of remitting 10% of disputed tax demand.

Analysis:

1. Challenge to Tax Demand: The petitioner challenged an order dated 31.12.2023, claiming they did not have a reasonable opportunity to contest the tax demand due to the cancellation of their GST registration. The petitioner argued that they were unaware of the proceedings as their registration was canceled in 2020. The court acknowledged the cancellation but noted that the petitioner was notified about discrepancies in returns through Form ASMT 10. The court found merit in the petitioner's claim and decided to provide an opportunity to contest the tax demand on terms, with the petitioner agreeing to remit 10% of the disputed tax demand.

2. Compliance with Principles of Natural Justice: The respondent argued that the principles of natural justice were complied with as the impugned order referred to a notice in Form ASMT 10 and a show cause notice dated 29.09.2023. The court considered this argument but also took into account the petitioner's situation of not monitoring the GST portal due to the registration cancellation. Despite finding compliance with natural justice principles, the court decided to set aside the order and remand the matter for reconsideration, emphasizing the importance of providing a reasonable opportunity to the petitioner, including a personal hearing.

3. Remand for Reconsideration with Condition: The court set aside the impugned order and remanded the matter for reconsideration with a condition that the petitioner remit 10% of the disputed tax demand within three weeks. The petitioner was allowed to submit a reply to the show cause notice within this period. Upon receipt of the reply and confirmation of the remittance, the respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months. The court disposed of the writ petition without any order as to costs, closing connected miscellaneous petitions.