2024 (10) TMI 967 - HC - GST

Challenge to order and consequential rectification order - discrepancies on scrutiny of returns under Section 61 of the Act - opprotunity of hearing not provided - violation of principles of natural justice - HELD THAT - In the present case on hand there was an error in filing GST 3B Returns that the Petitioner had inadvertently claimed Input Tax in ' RCM' Column instead of 'All other ITC Column' and the said aspect was stated by the Petitioner in its reply dated 05.09.2023, but the 1st Respondent had not considered the reply filed by the Petitioner had passed the impugned orders and that apart a sum of Rs. 2,99,000/- have been recovered for the tax liability of Rs. 2,33,000/-. Therefore, this Court is of the view that the impugned orders dated 27.12.2023 and 12.03.2024 are liable to be set aside. The orders impugned herein is set aside - Considering the fact that the impugned order itself has been set aside, this Court is of the opinion that the attachment made on the bank account of the petitioner cannot survive any longer and hence, it is lifted. As a sequel, 2nd respondent is directed to release the attachment on the bank account of the petitioner, immediately upon the production of a copy of this order. The writ petition is disposed of.

Issues:
1. Challenge to order dated 27.12.2023 and consequential rectification order dated 12.03.2024 passed by the 1st Respondent.
2. Opportunity for the petitioner to file a reply to the Show Cause Notice.
3. Consideration of petitioner's reply by the 1st Respondent.
4. Recovery of Rs. 2,99,000/- for tax liability of Rs. 2,33,000/-.

Detailed Analysis:
1. The petitioner filed a writ petition challenging the order dated 27.12.2023 and the rectification order dated 12.03.2024 passed by the 1st Respondent. The petitioner claimed that discrepancies were identified in their returns under Section 61 of the Act, specifically related to the Input Tax claimed in the wrong column. The petitioner submitted a detailed reply explaining the error but was not given a personal hearing before the impugned orders were passed. Subsequently, a demand notice, bank attachment notice, and blocking of the Electronic Credit Ledger were issued. The court found that the impugned orders were passed without considering the petitioner's explanation and set them aside. The court directed the petitioner to file a reply within three weeks, following which the 1st Respondent was instructed to conduct a personal hearing and pass appropriate orders expeditiously.

2. The petitioner requested an opportunity to file a reply to the Show Cause Notice to prove their case. The court acknowledged this request and directed the petitioner to submit their reply along with any necessary documents within three weeks. The court emphasized the importance of the 1st Respondent considering the petitioner's reply and conducting a personal hearing before making any decisions.

3. The 1st Respondent had issued a Show Cause Notice followed by reminders and personal hearing notices. The Special Government Pleader representing the 1st Respondent argued that sufficient opportunities were provided to the petitioner before passing the impugned order. However, the court noted that the petitioner's explanation was not considered before the orders were issued, leading to the recovery of an amount exceeding the tax liability. The court held that the impugned orders were unjust and set them aside, emphasizing the need for a fair consideration of the petitioner's submissions.

4. The court highlighted the discrepancy in the tax liability amount and the amount recovered from the petitioner. It was noted that Rs. 2,99,000/- was recovered for a tax liability of Rs. 2,33,000/-. This discrepancy further supported the court's decision to set aside the impugned orders and provide the petitioner with an opportunity to present their case effectively. The court ordered the lifting of the bank account attachment and directed the 2nd respondent to release the attachment promptly upon receipt of the court's order.

In conclusion, the court granted relief to the petitioner by setting aside the impugned orders, emphasizing the importance of due process, fair consideration of submissions, and timely resolution of tax-related issues.

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