2024 (7) TMI 746 - HC - GST

Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax proposal on merits - HELD THAT - In the impugned order, the first respondent concluded that the petitioner had failed to explain the unreconciled turnover on the basis that the petitioner had not properly reported the adjustment of a sum of Rs. 23 Crores against receivables. This aspect was not raised in the show cause notice or in the subsequent request for clarifications. Nonetheless, it should be recognized that the petitioner was called upon to explain the total unreconciled turnover of Rs. 80,63,40,950/- and, therefore, cannot be completely absolved of responsibility for not providing a proper clarification on this aspect. On instructions, learned counsel for the petitioner agrees that the petitioner would remit 10% of the disputed tax demand as a condition for re-consideration. The impugned order dated 18.03.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit an additional reply along with supporting documents - petition disposed off.

Summary

Issues:
Challenge to order on grounds of lack of reasonable opportunity for contesting tax proposal on merits.

Analysis:
The petitioner challenged an order dated 18.03.2024, alleging that they were not given a fair opportunity to contest a tax proposal on its merits. The petitioner had received a show cause notice in relation to reconciliation statements for assessment periods 2018-19 and 2020-21. The petitioner responded to the notice and provided clarifications as requested by the first respondent. However, the impugned order was issued despite these submissions.

Regarding the financial year 2018-19, the petitioner's counsel argued that the alleged unreconciled taxable turnover was related to the Puducherry Unit. Even though the petitioner submitted replies and GST returns for Puducherry, the respondent concluded that supporting documents were not provided to prove that services were rendered in Puducherry and not Tamil Nadu. For the financial year 2020-21, due to a moratorium, an amount of Rs. 83.06 crores was reflected in the reconciliation statement, with a lack of clarification on the breakdown between received and accrued amounts.

The senior standing counsel for the respondents contended that the original order was detailed and provided reasons for the conclusions reached, asserting that there was no basis for interference under Article 226 as principles of natural justice were followed.

The petitioner, a non-banking financial institution, had exempt interest income under GST laws but needed to prove that the income was interest-related. Disputes arose concerning turnover attributed to the Puducherry Unit for the 2018-19 assessment period and the taxation of Rs. 80,67,41,667 for 2020-21. The first respondent found shortcomings in the petitioner's explanations, leading to the order being set aside on the condition that 10% of the disputed tax demand be remitted within fifteen days for reconsideration, allowing the petitioner to submit additional replies and supporting documents within the same period.

In conclusion, the impugned order was set aside with conditions for reconsideration and provision of a reasonable opportunity for the petitioner, including a personal hearing, within three months from the receipt of additional submissions. The case was disposed of with no costs incurred, and related applications were closed.