2024 (8) TMI 1378 - HC - GST

Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - wrongful availment of Input Tax Credit (ITC) - HELD THAT - On examining the impugned order, it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner, which include the bank statement showing payments made to the supplier, the GSTR 2A indicating the availability of ITC, it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand, however, it is also necessary to put the petitioner on terms. The matter is remanded for reconsideration on condition that the petitioner remits 20% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - impugned order is set aside - petition disposed off by way of remand.

Summary

Issues:
Petitioner's lack of reasonable opportunity to contest tax demand on merits.

Analysis:
The petitioner received a show cause notice for allegedly wrongly availing Input Tax Credit (ITC) for the tax period 2017-2018. The petitioner responded to the notice by providing original tax invoices, bank statement, ledger account, and relevant returns of the supplier and the petitioner. The impugned order was issued on 30.08.2023.

The petitioner claimed unawareness of the impugned order as GST compliances were managed by a tax consultant. The petitioner only became aware of the order upon receiving an attachment order for the bank account on 18.03.2024.

The petitioner sought another opportunity to present relevant documents and contest the tax claim on merits, agreeing to remit 20% of the disputed tax demand as a condition for remand.

The Government Advocate pointed out that three reminders for personal hearing were issued to the petitioner after the petitioner's initial reply. The advocate highlighted the lack of submission of documents by the petitioner to establish the actual movement of goods.

Upon review, it was noted that while the petitioner submitted various documents, proof of actual movement of goods such as e-way bills, lorry receipts, and weighment slips were missing. The tax proposal was confirmed mainly due to the absence of evidence of goods movement. The court decided to set aside the impugned order and remand the matter for reconsideration, with the petitioner required to remit 20% of the disputed tax demand within two weeks.

The petitioner was allowed to submit additional documents within the specified period to prove actual movement of goods. Once satisfied with the documents and receipt of the remitted amount, the 1st respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh order within two months.

As a result of setting aside the impugned order, the attachment order was lifted. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.