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2024 (7) TMI 1159 - HC - GSTViolation of principle sof natural justice - petitioner's contentions were not taken into account - mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - HELD THAT - The third respondent did not discuss the petitioner's explanation for classifying it as a farm tractor or record reasons for rejecting such explanation. As regards the ITC mismatch issue, in the petitioner's reply, the petitioner refers to the issuance of invoices after the end of the financial year. On this issue, the third respondent records that the petitioner had stated that ITC matching was not a mandatory requirement for the period July 2017 to March 2019. This was not the contention of the petitioner in the reply. Thus, on both these issues, the petitioner's contentions were not dealt with in the impugned order. For such reason, a remand is necessary. The impugned order dated 24.04.2024 is partly set aside only insofar as the ITC mismatch issue and the rate of tax difference / classification issue are concerned. Consequently, the third respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off.
Issues:
Challenge to an order in original due to petitioner's contentions not considered; Audit observations related to tractor classification and GSTR returns; Classification of tractors as agricultural or road tractors; Mismatch between GSTR 3B returns and GSTR 2A; Non-consideration of petitioner's explanations in the impugned order; Requirement of a remand for proper consideration of contentions and Section 74 of GST enactments. Analysis: The judgment involves a challenge to an order in original dated 24.04.2024, primarily on the grounds that the petitioner's contentions regarding audit observations were not adequately considered. The audit observations related to the classification of tractors and a mismatch between the petitioner's GSTR 3B returns and auto-populated GSTR 2A. The petitioner contended that the tractors were agricultural and should be taxed at 12% instead of 28%. Additionally, the petitioner argued that the mismatch in invoices was due to subsequent issuances by suppliers, allowing for Input Tax Credit (ITC) as per law. However, the impugned order did not sufficiently address these explanations, leading to the need for a remand for proper consideration. The petitioner's counsel referred to Schedule-II and Chapter heading 8701 to support the classification of tractors as agricultural. The counsel highlighted that the petitioner's tractors were intended for agricultural purposes, as per the Tamil Nadu Government Transportation Code definitions of farm and road tractors. The counsel also emphasized that the petitioner's explanations regarding ITC mismatch were not adequately considered in the impugned order, necessitating a review for a fair decision. The Additional Government Pleader for the respondents argued that the impugned order's conclusions did not define road tractors clearly. By presenting photographs of the petitioner's tractors, it was contended that they appeared to be road tractors rather than farm tractors. This raised a crucial issue of classification based on visual evidence and definitions, requiring proper consideration in the revised order following the remand. The judgment highlighted that the impugned order failed to address the petitioner's explanations adequately, both regarding the classification of tractors and the ITC mismatch issue. The order did not provide reasons for rejecting the petitioner's contentions, indicating a lack of thorough consideration. As a result, the court partially set aside the order, specifically concerning the ITC mismatch and tax classification issues. The third respondent was directed to afford the petitioner a fair opportunity, including a personal hearing, and issue a fresh order within three months to rectify the deficiencies in the initial decision. In conclusion, the judgment emphasized the importance of proper consideration of petitioner's contentions in tax-related matters, highlighting the need for a thorough review and reasoned decision-making process. The remand was deemed necessary to ensure a fair and just outcome based on all relevant factors and legal provisions, including Section 74 of the applicable GST enactments.
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