2024 (12) TMI 1494 - HC - GST

Challenge to assessment order - disallowance of ITC - non-filing of Annual returns in Form GSTR-9 and GSTR-9C for the assessment year 2018-19 - without application of mind the final order was passed by the Assessing Officer - violation of principles of natural justice - HELD THAT - It is evident that the impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner, the petitioner was unaware of the issuance of the show cause notice through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances, this Court is of the view that the impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law. The impugned order dated 08.03.2024 and the consequential order dated 11.03.2024 are set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from today (15.10.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount. Petition disposed off.

2023 (1) TMI 379 - HC

1. ISSUES PRESENTED and CONSIDERED

The legal judgment addresses the following core issues:

Whether the impugned orders dated 08.03.2024 and 11.03.2024 issued by the respondent are valid, given the alleged procedural lapses, including the failure to issue a mandatory intimation in Form GST DRC-01A as per Rule 142(1A) of the CGST Rules.
Whether the principles of natural justice were violated due to the lack of a personal hearing and proper notification to the petitioner.
Whether the calculation of late fees and tax liabilities by the respondent was in accordance with the provisions of the CGST and TNGST Acts.
Whether the mismatch between GSTR-2A and GSTR-3B justifies the reversal of Input Tax Credit (ITC) claimed by the petitioner.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Impugned Orders

Relevant Legal Framework and Precedents: The petitioner contends that the orders were issued without mandatory intimation in Form GST DRC-01A, violating Rule 142(1A) of the CGST Rules. The petitioner cited a precedent from the Allahabad High Court, which quashed a similar demand order due to the absence of a show cause notice.
Court's Interpretation and Reasoning: The court found that the orders were issued without providing the petitioner an opportunity for a personal hearing, violating principles of natural justice.
Key Evidence and Findings: The notices were uploaded on the GST Portal, but the petitioner claimed unawareness of these notices due to the lack of a physical copy.
Application of Law to Facts: The court noted the procedural lapses, including the failure to issue a mandatory intimation and lack of personal hearing, as grounds for setting aside the orders.
Treatment of Competing Arguments: The respondent admitted that no personal hearing was provided and suggested remanding the matter for reconsideration.
Conclusions: The court set aside the impugned orders and remanded the matter for fresh consideration, subject to certain conditions.

Issue 2: Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents: The principles of natural justice require a fair opportunity to be heard before any adverse decision is made.
Court's Interpretation and Reasoning: The court emphasized the importance of providing a personal hearing and proper notification to uphold natural justice.
Key Evidence and Findings: The petitioner was not served a hard copy of the notice and was unaware of the proceedings until a phone call from the respondent.
Application of Law to Facts: The lack of a personal hearing and proper notification constituted a breach of natural justice.
Treatment of Competing Arguments: The respondent acknowledged the procedural oversight and agreed to a remand.
Conclusions: The court concluded that the orders were issued in violation of natural justice and required reconsideration.

Issue 3: Calculation of Late Fees and Tax Liabilities

Relevant Legal Framework and Precedents: Section 47(2) of the TNGST Act limits late fees to a maximum of 0.25% of turnover.
Court's Interpretation and Reasoning: The court found inconsistencies in the respondent's calculations, which exceeded the statutory maximum.
Key Evidence and Findings: The respondent's orders demanded fees exceeding the statutory limit, contradicting their own annexure.
Application of Law to Facts: The court noted the incorrect application of Section 47(2), leading to excessive demands.
Treatment of Competing Arguments: The petitioner argued that the calculations were erroneous and exceeded legal limits.
Conclusions: The court found the calculations flawed and required reassessment.

Issue 4: Reversal of Input Tax Credit

Relevant Legal Framework and Precedents: The petitioner argued that ITC should not be disallowed due to a mismatch between GSTR-2A and GSTR-3B when transactions are genuine.
Court's Interpretation and Reasoning: The court did not provide a detailed analysis on this issue, focusing instead on procedural fairness.
Key Evidence and Findings: The petitioner held a certificate supporting the genuineness of transactions.
Application of Law to Facts: The court's decision to remand the case implies a need for further examination of this issue.
Treatment of Competing Arguments: The petitioner's argument was not directly addressed but remains open for reconsideration.
Conclusions: The issue was left for reassessment upon remand.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice."
Core Principles Established: The necessity of adhering to procedural requirements, including issuing mandatory notices and providing personal hearings, to uphold natural justice.
Final Determinations on Each Issue: The court set aside the impugned orders and remanded the matter for fresh consideration, subject to the petitioner paying 10% of the disputed tax and the respondent providing a personal hearing.

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