2024 (7) TMI 241 - HC - GST

Violation of principles of natural justice - non application of mind - difference between the turnover reflected in Form 26 AS and the turnover reflected in the petitioner's GST returns - HELD THAT - It is evident that tax liability was imposed on the petitioner on the difference between the turnover reflected in Form 26 AS and the turnover reflected in the petitioner's GST returns. Learned counsel for the petitioner explained this difference by pointing out that the period running from 01.04.2017 to 30.06.2017 does not fall within the GST period. Since the impugned order was issued without hearing the petitioner on this aspect, reconsideration is necessary by putting the petitioner on terms with regard to the default in responding to the show cause notice or participate in proceedings. The impugned order dated 28.12.2023 is set aside subject to the 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 - Petition disposed off.

Summary

Issues:
Challenge to order on grounds of breach of natural justice and non-application of mind in GST assessment for the period 2017-2018.

Analysis:
The petitioner contested an order in original dated 28.12.2023, arguing that the principles of natural justice were breached and there was a lack of proper consideration. The petitioner's returns under GST enactments for the assessment period 2017-2018 were scrutinized following a show cause notice issued on 07.08.2023. The petitioner's counsel highlighted that GST laws came into effect on 01.07.2017, leading to a mismatch between pre-GST and GST period turnovers. The petitioner agreed to remit 10% of the disputed tax demand as a condition for reconsideration.

The Additional Government Pleader for the respondent affirmed that the principles of natural justice were followed, pointing to the issuance of various notices, including a personal hearing notice. The impugned order imposed tax liability based on the discrepancy between Form 26 AS and the petitioner's GST returns. The petitioner's counsel emphasized that the period from 01.04.2017 to 30.06.2017 was pre-GST and thus should not be considered for tax assessment. The court noted the necessity for a fresh consideration due to the lack of hearing the petitioner on this crucial aspect.

Consequently, the court set aside the impugned order dated 28.12.2023 with the condition that the petitioner remits 10% of the disputed tax demand within two weeks. The petitioner was granted the opportunity to respond to the show cause notice within the specified period. Once the 10% demand was met, 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 also ordered the removal of bank attachment due to the annulment of the assessment order.

In conclusion, the writ petition was disposed of with no costs, and connected miscellaneous petitions were closed in light of the court's directions for a reevaluation of the tax liability assessment under GST for the specified period.