2024 (8) TMI 1031 - HC - GST

Rejection of rectification application - zero rated supply - violation of principles of natural justice - HELD THAT - On perusal of the impugned order, it is evident that the tax payer's reply and the documents annexed thereto were considered in respect of each defect dealt with therein. Upon such consideration, tax proposals relating to five defects were withdrawn / dropped. The petitioner subsequently filed rectification application dated 21.03.2024 and attached the purchase order and MEPZ certificate. Likewise, the petitioner has provided details of credit notes and the availment of Input Tax Credit so as to establish that only net ITC was availed of. These additional documents and information would not justify rectification of the order in original given the limited scope of Section 161 of applicable GST enactments. The impugned order in original dated 29.12.2023 is set aside only insofar as defect nos.5 and 6 are concerned subject to the condition that the petitioner remits 20% of the disputed tax demand in respect of the said defects as agreed to within fifteen days from the date of receipt of a copy of this order. The petitioner is also permitted to re-submit all relevant documents within said period. Upon receipt thereof and on being satisfied that 20% of the disputed tax demand as regards defect nos.5 and 6 were received, the 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 the petitioner's reply. Petition disposed off.

Summary

Issues:
1. Challenge to order in original and rejection of rectification application.

Analysis:
The petitioner challenged an order in original dated 29.12.2023 and the rejection of a rectification application in a writ petition. The petitioner replied to a show cause notice dated 27.09.2023 on 20.12.2023, leading to the issuance of the order in original. The order accepted the petitioner's explanation for five defects but confirmed tax proposals for defect nos. 5 and 6. Subsequently, a rectification application was submitted with additional documents, which was rejected by an order dated 27.05.2024.

2. Arguments of the Petitioner:
The petitioner's counsel argued that the petitioner had submitted relevant documents to establish zero-rated supplies and provided copies of credit notes for defect no. 6. The petitioner contended that tax proposals were confirmed without a personal hearing. Regarding the rectification application, it was claimed that sufficient documents were submitted, but the rejection order lacked reasoning and referred to a missing annexure.

3. Arguments of the Respondent:
The Additional Government Pleader for the respondent stated that the petitioner's reply was duly considered, resulting in the withdrawal of five tax proposals. For defect nos. 5 and 6, cogent reasons were provided for rejecting the taxpayer's reply. Regarding the rectification application, it was argued that rectification could only be allowed for errors apparent on the face of the record, which were not present in the original order.

4. Court's Analysis:
Upon reviewing the impugned order, it was found that the taxpayer's reply and annexed documents were considered for each defect, leading to the withdrawal of tax proposals for five defects. Clear reasons were given for rejecting the claims related to defect nos. 5 and 6, based on the evidence provided. The court found the reasoning in the original order to be sound and justified.

5. Court's Decision:
The court set aside the original order only concerning defect nos. 5 and 6, with the condition that the petitioner remit 20% of the disputed tax demand for these defects within fifteen days. The petitioner was allowed to resubmit relevant documents within this period. Upon receiving the payment and documents, the respondent was directed to provide the petitioner with a reasonable opportunity, including a personal hearing, and issue a fresh order within three months.

6. Conclusion:
The writ petition was disposed of with no costs, and related motions were closed as per the court's decision to reconsider defect nos. 5 and 6 based on the additional documents provided by the petitioner.