2024 (8) TMI 237 - HC - GST

Challenge to correctness of the order at Annexure-A passed under Section 73 (1) of the KGST/CGST Act, 2017 - HELD THAT - In light of the assertion that the petitioner was not keeping well and had also returned to his native place after winding up his business and accordingly he was not in a position to diligently follow up is required to be taken note of. However, in light of the lapse, the petitioner ought to be saddled with costs. In light of conclusion arrived at by the Officer, it would be appropriate that the petitioner be availed of another opportunity to produce the documents which may be taken note of and appropriate orders could be passed. The matter is remitted for fresh consideration. Petitioner to pay cost of Rs.10,000/- to the respondents. Petitioner to appear before the first respondent on 05.08.2024 - Petition disposed off by way of remand.

Summary

Issues:
Challenge to correctness of order under Section 73 (1) of KGST/CGST Act, 2017 due to petitioner's inability to participate in assessment proceedings, Officer's conclusion without production of books of accounts, petitioner's submission of documents, sufficiency of opportunity granted, entitlement for reversal of ITC, petitioner's health condition affecting participation, and costs imposed.

Analysis:
The petitioner contested the order passed under Section 73 (1) of the KGST/CGST Act, 2017, citing inability to participate in assessment proceedings due to health reasons. The Officer's conclusion, based on lack of produced books of accounts, led to a demand raised against the petitioner. The petitioner argued that if the materials, including books of accounts, had been presented, they could have explained the demand. Consequently, the petitioner submitted a memo with various documents, such as an Audit Report under Section 44AB of the Income Tax Act, 1961, to support their case.

During the proceedings, the counsel for the Revenue asserted that sufficient opportunity had been granted to the petitioner, as indicated in the impugned order. However, the petitioner's counsel highlighted that the Assessing Officer had concluded the proceedings without the necessary materials for matching, leading to a potential entitlement for the reversal of Input Tax Credit (ITC). In response, the petitioner submitted additional documents, including financial statements and tax-related reports, to address the gaps in the assessment process.

Considering the arguments presented, the Court emphasized the importance of providing the petitioner with another opportunity to produce the required documents for a fair assessment. Acknowledging the petitioner's health condition and the challenges faced in actively participating in the proceedings, the Court set aside the initial order and directed a fresh consideration of the matter. Additionally, the Court imposed a cost on the petitioner for the lapse in participation, indicating a need for diligence despite the circumstances. The petitioner was instructed to pay costs to the respondents and appear before the first respondent on a specified date, with all contentions being kept open for further review.

In conclusion, the petition was disposed of, highlighting the need for a fair and thorough assessment process, considering the petitioner's circumstances while upholding the principles of natural justice and procedural fairness.