2024 (8) TMI 766 - HC - GST

Violation of principles of natural justice - challenge to order - non-application of mind and failure to consider the material placed on record by the petitioner - HELD THAT - On examining the impugned order, as regards the tax proposal relating to trade payables, it appears that such order was passed by assuming that 5% of the trade payables reflected in the financial statement were not paid within the 180 day period. This conclusion is entirely speculative and, therefore, calls for interference. As regards the tax proposal relating to excess input tax credit being availed, in respect of supplies where the difference in ITC is more than Rs. 5 lakhs, the petitioner should have produced certificates from the chartered accountants of the suppliers' concerned. This does not appear to have been done by the petitioner. After making adjustments, tax was imposed by assuming that there was sales suppression as a consequence of inward supply suppression. This conclusion is also speculative and reconsideration is warranted. About two tax proposals were dropped and, therefore, it is sufficient if reconsideration is restricted to confirmed tax proposals. The impugned order dated 17.11.2023 is set aside partly (only insofar as confirmed tax proposals are concerned) on condition that the petitioner remits a sum of Rs. 25 lakhs towards the disputed tax demand within 15 days from the date of receipt of a copy of this order. Subject to being satisfied that the said amount was received, the 2nd 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. The Writ Petition is disposed of.

Summary

Issues:
Challenge to order on grounds of non-application of mind and failure to consider material placed on record; Jurisdictional issue regarding the place of business; Compliance with principles of natural justice; Reconsideration of tax proposals; Requirement of remittance towards disputed tax demand; Setting aside of order on confirmed tax proposals with conditions; Protection of revenue interest; Fresh assessment process; Bank attachment status.

Analysis:
The judgment involves multiple issues, starting with the challenge to the order based on non-application of mind and failure to consider the material placed on record. The petitioner received a show cause notice covering various tax proposals, to which a detailed reply was provided. However, the impugned order was issued without proper consideration of the explanations provided by the petitioner, leading to challenges regarding the tax proposals, including issues related to reverse charge basis taxation, mismatch between GSTR 9 and Form 26AS, and excess availment of Input Tax Credit without proper documentation.

Another significant issue raised was the lack of jurisdiction, as the petitioner's principal place of business was in T.Nagar, Chennai, while the State Tax Officer in Gudiyatham exercised jurisdiction. The compliance with principles of natural justice was also a point of contention, with the Government Advocate asserting that the petitioner's reply was duly considered in issuing the order.

Upon examination of the impugned order, specific tax proposals were found to be speculative and lacking proper basis, warranting interference. The judgment highlighted the need for the petitioner to remit a sum towards the disputed tax demand to protect revenue interest, with a direction for reconsideration of confirmed tax proposals within a specified timeframe.

The order was set aside partly, subject to the petitioner making the required remittance, and a fresh order was directed to be issued within a specified period after providing the petitioner with a reasonable opportunity, including a personal hearing. The judgment emphasized that the observations made were tentative and not binding on the assessing officer during the fresh assessment process, leading to the lifting of the bank attachment.

Ultimately, the writ petition was disposed of with specific conditions and without costs, ensuring the closure of connected miscellaneous petitions as well. The judgment addressed various legal issues, including procedural fairness, jurisdictional concerns, and the need for a thorough reconsideration of tax proposals to protect both the petitioner's rights and revenue interests.