2024 (8) TMI 577 - HC - GST

Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal on merits - mismatch between the petitioner's annual return and the reconciliation statement - HELD THAT - The petitioner has placed on record his reconciliation statement. Prima facie , this statement indicates that the supplies were declared through amendments for the value of Rs. 6,78,000/- and sums of Rs. 61,020/- each were paid with regard thereto in respect of CGST and SGST. This amount tallies with the amounts specified in the impugned order in respect of discrepancy no.12. It also appears prima facie that the same issue was raised as discrepancy no.2. The petitioner has placed on record an extract from the electronic credit ledger, which indicates prima facie that credit was reversed to the extent of Rs. 8,42,451/- on 17.02.2023. The impugned order dated 30.12.2023 is set aside on condition that the petitioner remits 5% of the disputed tax demand in respect of discrepancy nos.2 and 12 collectively, 5% of the disputed tax demand in respect of discrepancy nos.6 9 and 10% of the disputed tax demand in respect of discrepancy no.4 as agreed to. Such remittance shall be made within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Petition disposed off.

Summary

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

Analysis:
The petitioner challenged an order dated 30.12.2023, claiming they were not given a fair chance to contest a tax proposal on its merits. The petitioner argued that their GST compliances were managed by a consultant who failed to inform them about a show cause notice uploaded on the common portal, leading to their inability to contest the tax proposal effectively.

The discrepancies highlighted in the impugned order included issues such as a mismatch between the petitioner's annual return and reconciliation statement, reporting of supplies through amendments, and the reversal of ineligible transitional credit. The petitioner's counsel presented arguments regarding the differential taxable value reported in the GSTR 9C return, reversal of credits, and the taxability of interest receipts from fixed deposits under GST laws.

On the other hand, the Government Advocate representing the respondents contended that the tax proposal resulted from the petitioner's failure to report supplies declared through amendments in the annual return and delayed reversal of ineligible transitional credit. The petitioner submitted a reconciliation statement showing payments made in relation to the discrepancies identified in the order.

After considering the submissions and evidence presented, the court set aside the impugned order on the condition that the petitioner remit specific percentages of the disputed tax demand related to different discrepancies within a specified timeframe. The petitioner was granted the opportunity to reply to the show cause notice and participate in a fresh hearing, with the tax authorities directed to issue a new order within three months of receiving the petitioner's reply.

Ultimately, the writ petition was disposed of without costs, with the court providing a detailed framework for addressing the discrepancies raised by the petitioner and ensuring a fair opportunity for contesting the tax proposal on its merits.