2024 (7) TMI 230 - HC - GST

Challenge to GST audit proceedings - impugned order assailed on the ground that the audit was not conducted in accordance with subsection (4) of Section 65 of applicable GST enactments - HELD THAT - It is unclear from the documents on record as to when all the documents called for in GST ADT-01 were provided by the petitioner. As regards the contention relating to non filing of ITC-02, the petitioner's contention is that no ITC was availed of by the consumer division and that there was no transfer thereof as a consequence. It is just and necessary to provide another opportunity to the petitioner to place all relevant documents on record in this connection to effectively contest the tax demand. However, it also necessary to protect revenue interest while remanding the matter for reconsideration. The impugned order dated 22.12.2023 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 two weeks from the date of receipt of a copy of this order - the writ petition is disposed off.

Summary

Issues Involved:
1. Challenge to an order dated 22.12.2023 related to GST audit proceedings.

Analysis:
The petitioner's parent company underwent a demerger, transferring assets to a new entity, the petitioner. Subsequently, a GST audit was conducted, leading to a show cause notice and the impugned order. The petitioner challenges the order on the grounds of non-compliance with the audit timeline and the consideration of a reply regarding non-filing of Form ITC-02. The petitioner argues that the audit exceeded the stipulated three-month period and that the Form ITC-02 was not required due to no transfer of Input Tax Credit (ITC) to the consumer division.

The petitioner offers to remit 10% of the disputed tax demand for a remand. The Additional Government Pleader asserts that the petitioner's objections regarding the audit timeline were untimely, as the audit report was provided earlier, and clarifies that a nil return for Form ITC-02 was necessary if no ITC transfer occurred. The court notes that the audit's commencement date is crucial, depending on when the requested documents were provided, and decides to allow the petitioner to submit additional documents to contest the tax demand while safeguarding revenue interests during reconsideration.

Consequently, the court sets aside the impugned order and remands the matter for reconsideration, with the condition of remitting 10% of the disputed tax demand within two weeks. The respondent is directed to offer a fair opportunity for the petitioner to present their case, conduct a personal hearing, and issue a fresh order within two months of the remittance. The petitioner is also permitted to file Form ITC-02 during this process. The writ petition is disposed of with no costs, and connected miscellaneous petitions are closed.