2024 (9) TMI 1151 - HC - GST

Challenge to assessment order - Section 74 of applicable GST enactments - petitioner's father had filed nil returns with regard to outward supply for 2017-18 - reasonable basis to proceed on suppression of sales or not - HELD THAT - The show cause notice proceeds on the basis that the purchase value in 2017-18 was Rs.1,13,86,912/-. After noticing that nil returns were filed as regards outward supplies in the assessment period, the total value of purchases was treated as suppressed sales and the petitioner's father was called upon to show cause as to why tax should not be imposed on that basis. On the contrary, the impugned order proceeds on the assumption that processed turmeric is required to be sold within a maximum period of 18 months. By deeming that the sale took place in February 2019, the tax liability was computed. No basis is discernible from the impugned order as to why such assumptions were made. The impugned order dated 30.12.2023 is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to place additional documents before the respondent within four weeks from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues:
Challenge to assessment order under applicable GST enactments for assessment period 2017-18.

Analysis:
The petitioner, son of a deceased registered person under GST enactments, challenged an assessment order dated 30.12.2023 related to the business of buying and selling processed turmeric. The petitioner contended that the respondent wrongly invoked Section 74 of GST enactments and incorrectly assumed that the goods should have been sold within 18 months from purchase. The petitioner's father had filed nil returns for outward supplies in 2017-18, leading to the respondent treating total purchases as suppressed sales. However, the impugned order calculated tax liability based on a deemed sale in February 2019 without proper notice or personal hearing to the petitioner, violating statutory provisions.

The Government Advocate argued that there was a reasonable basis to proceed on suppression of sales due to nil returns filed by the petitioner's father. He also mentioned that the petitioner failed to provide evidence of closing stock as on 31.03.2018, which could have supported the claim of no sales in 2017-18. The show cause notice and impugned order differed in their approach, with the latter assuming a sale deadline of 18 months for processed turmeric without clear justification. The lack of notice on the deemed sale and absence of a personal hearing further weakened the validity of the impugned order.

The High Court, after considering the arguments, set aside the impugned order and remanded the matter to the respondent for reconsideration. The petitioner was granted four weeks to submit additional documents, and the respondent was directed to provide a reasonable opportunity, including a personal hearing, before issuing a fresh order within two months from receiving the additional documents. The court emphasized that all contentions remained open for the petitioner during the remanded proceedings.

In conclusion, the writ petition challenging the assessment order for the assessment period 2017-18 was disposed of with the above directions, ensuring procedural fairness and compliance with statutory requirements in the reconsideration process by the respondent.