2024 (7) TMI 234 - HC - GST

Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal - HELD THAT - On perusal of the impugned order, it is evident that the tax proposal arose out of a scrutiny of the GSTR-2A and upon noticing issuance of credit notes by Proficient Technologies. The petitioner has placed on record the GSTR-3B returns for the relevant month to establish that the petitioner did not avail of ITC in respect of purchases from Proficient Technologies. In these circumstances, reconsideration is necessary by putting the petitioner on terms. The impugned order dated 01.11.2023 is set aside and the matter is remanded to the respondent for reconsideration subject to the 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 by way of remand.

Summary

Issues:
Challenge to tax proposal due to lack of reasonable opportunity for contesting.

Analysis:
The case involves a writ petition challenging an order dated 01.11.2023 on the grounds of the petitioner not having a reasonable opportunity to contest the tax proposal. The petitioner, engaged in buying and selling domestic appliances, claimed that a supplier issued invoices in November 2018 and later canceled them by issuing credit notes, for which the petitioner did not avail Input Tax Credit (ITC). The petitioner's counsel referred to GSTR-3B returns to support the claim of not availing ITC. It was argued that the show cause notice was not responded to as it was uploaded on the GST portal but not communicated through any other means.

The Government Advocate representing the respondent contended that the petitioner was provided with sufficient opportunity through a notice in Form ASMT-10, a show cause notice, and a personal hearing. The tax proposal was based on scrutiny of GSTR-2A and the issuance of credit notes by the supplier. The court, upon reviewing the impugned order and the petitioner's GSTR-3B returns, found it necessary to remand the matter for reconsideration, putting the petitioner on terms.

Consequently, the High Court set aside the order dated 01.11.2023 and remanded the matter to the respondent for reconsideration, with the condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner was allowed to submit a reply to the show cause notice within the specified period. The respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months from receiving the petitioner's reply. The writ petition was disposed of with no order as to costs, and connected miscellaneous petitions were closed.