2024 (7) TMI 172 - HC - GST

Violation of principles of natural justice - order assailed on the ground that the petitioner was not provided a reasonable opportunity to contest the tax demand on merits - HELD THAT - The conclusion that the aggregate sum of Rs. 470,38,00,000/- is taxable merely because the petitioner had not placed on record all necessary documents is therefore untenable. This amount constitutes about 85% of the total demand. Interference with the impugned order is, therefore, warranted. The petitioner cannot be absolved of complete responsibility for the current state of affairs in as much as the petitioner did not submit all necessary documents. Therefore, it is necessary to put the petitioner on terms so as to safeguard revenue interest to some extent. The impugned order dated 25.04.2024 is set aside subject to the condition that the petitioner remits a sum of Rs. 50,00,000/- within a period of three weeks from the date of receipt of a copy of this order - Petition dipsosed off.

Summary

Issues: Petitioner not provided reasonable opportunity to contest tax demand on merits.

Analysis:
1. The petitioner challenged an order dated 25.04.2024, alleging lack of opportunity to contest the tax demand. The petitioner, engaged in LNG activities, responded to a show cause notice regarding audit observations. The petitioner explained discrepancies, including a significant amount payable to EPC contractors. Despite responses, a substantial sum was treated as taxable, resulting in a GST demand of about Rs. 84 crores. The petitioner agreed to remit Rs. 50,00,000 towards the disputed tax demand for remand.

2. The Additional Government Pleader contended that natural justice principles were followed, with the petitioner's replies considered before issuing the impugned order. The order dealt with seven tax proposals, including treating sundry creditors' payables as taxable under GST laws. The assessing officer's decision was based on the petitioner's failure to provide all necessary documents for verification, leading to the conclusion that the amount was taxable.

3. The court noted that the impugned order did not consider the subsequent reply and documents submitted by the petitioner. The court found the conclusion that the entire amount was taxable due to missing documents untenable. The court acknowledged the petitioner's responsibility for not submitting all necessary documents but set aside the order, directing the petitioner to remit Rs. 50,00,000 within three weeks and submit additional documents for a fresh assessment.

4. Consequently, the court disposed of the writ petition without costs, allowing the petitioner to present additional documents within a specified timeframe for a reassessment of the tax demand, emphasizing the need for a reasonable opportunity to contest the matter.