2024 (7) TMI 170 - HC - GST

Violation of principles of natural justice - no reasonable opportunity to contest the tax demand on merits - mismatch between the petitioner's GSTR 1 statement and the GSTR-3B returns - HELD THAT - The tax proposal relates to a mismatch between the petitioner's GSTR- 3B returns and the GSTR-1 statement. The petitioner asserts that this was on account of an erroneous double reporting of turnover both by the petitioner and its sister concern M/s.Proactive Systems. In these facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 27.12.2023 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 - Petition disposed off.

Summary

Issues:
Challenge to order due to lack of reasonable opportunity to contest tax demand on merits.

Analysis:
The petitioner challenged an order dated 23.02.2024, arguing that they were not given a fair chance to contest a tax demand. The issue arose from a show cause notice dated 24.03.2023 regarding a mismatch in the petitioner's GSTR 1 statement and GSTR-3B returns. The petitioner responded on 19.04.2023, claiming that subsequent communications and the impugned order were only uploaded on the portal, not directly communicated. The petitioner contended that this denial of a reasonable opportunity violated their rights.

The Government Advocate for the respondents argued that the petitioner and their sister concern both reported the same turnover, potentially leading to the recipient availing input tax credit. Due to the absence of credit notes from the petitioner, the tax authority proceeded with the tax proposal. The impugned order highlighted the mismatch between the petitioner's GSTR-3B returns and GSTR-1 statement, attributed to double reporting of turnover by the petitioner and their sister concern. The court acknowledged the need for the petitioner to contest the tax demand on merits, subject to remitting 10% of the disputed tax demand.

Consequently, the impugned order dated 27.12.2023 was set aside, with the condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner was granted the opportunity to reply to the show cause notice within the specified period. Upon receiving the reply and the remittance, the tax authority was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months. The writ petition was disposed of without costs, along with the closure of connected miscellaneous petitions.