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2025 (4) TMI 1160 - HC - GSTMaintainability of petition - availability of alternate remedy of appeal under Section 107 of the Central Goods and Services Tax Act - failing to consider the relevant documents produced by the petitioner during the adjudication proceedings - Violation of princples of natural justice - HELD THAT - The entire materials were placed before the authority in the statutory forms and it was incumbent upon them to verify the genuineness of the statutory forms that are available in the portal. When we read the impugned order the stand as now reflected in the statement that the 1st respondent could not reconcile the data available in the GST portal and therefore he had proceeded to reject the claim of the petitioner does not appear to be the ground on which the final order was issued. The apparent change in the stand clearly reveals that the 1st respondent did not apply his mind properly to the relevant records before it. Normally the remedy of the appellant against Ext.P4 order is to prefer an appeal before the appellate authority we are of the considered view that in the peculiar facts and circumstances the appellant need not be relegated to the alternative remedy of preferring the appeal especially since the 1st respondent himself has now admitted before us that he was not in a position to reconcile the data presented before him by the appellant/petitioner and that was available in the portal. Therefore in such circumstances the 1st respondent ought to have granted an opportunity to the appellant to explain the discrepancy. Having not chosen to do so is clearly a violation of the principles of natural justice. Conclusion - i) The writ petition was maintainable in the facts of the case despite the availability of an appeal under Section 107 CGST Act. ii) The assessing authority s failure to consider relevant documents and refusal to grant hearing on reconciliation amounted to violation of natural justice. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of Writ Petition vis-`a-vis Alternate Remedy under Section 107 CGST Act Relevant legal framework and precedents: Section 107 of the CGST Act provides an appellate remedy against orders passed under the Act. The principle that statutory appeals are the appropriate forum for challenging such orders is well-established, and writ petitions are generally not entertained when an efficacious alternative remedy exists. Court's interpretation and reasoning: The learned Single Judge had dismissed the writ petition on the ground that the petitioner should pursue appeal under Section 107. The Court acknowledged this principle but observed that the facts of the present case warranted an exception, given the failure of the assessing authority to consider relevant documents and the violation of natural justice. Application of law to facts: The Court found that the petitioner's grievance was not merely about challenging the assessment but about the procedural irregularity and denial of opportunity to reconcile data and explain discrepancies. This procedural defect justified interference by the writ jurisdiction despite the existence of an alternate remedy. Conclusions: The Court held that the petitioner need not be relegated to the alternative remedy of appeal in the peculiar facts and circumstances of the case. Issue 2: Violation of Principles of Natural Justice Relevant legal framework and precedents: The principles of natural justice require that a party affected by an adverse order must be given a fair opportunity to present its case, including an opportunity to produce relevant evidence and explain any discrepancies. Court's interpretation and reasoning: The petitioner contended that the assessing authority ignored the relevant annexures and documents submitted during the personal hearing and in written submissions. The Court noted that the assessing authority did not afford any opportunity to the petitioner to explain the mismatch between ITC claimed and ITC auto-populated in the GST portal. Key evidence and findings: The respondent's affidavit admitted that the petitioner had submitted data generated from its in-house computer systems, but the assessing authority found that these were not reconcilable with the GST portal data. However, the order did not reflect any attempt to seek explanation or grant an opportunity to reconcile the differences. Treatment of competing arguments: The respondent argued that the petitioner failed to produce relevant documents to substantiate the claim and that the data was not verifiable from the GST portal. The petitioner argued that the documents were statutory returns and it was incumbent on the authority to verify their genuineness and allow reconciliation. Application of law to facts: The Court found that the assessing authority's failure to seek explanation or grant an opportunity to reconcile the data amounted to non-application of mind and violation of natural justice. Conclusions: The Court concluded that the order passed without affording the opportunity to explain discrepancies was vitiated by violation of natural justice. Issue 3: Proper Application of Mind to Reconciliation of ITC Data Relevant legal framework and precedents: Under the CGST Act and related rules, input tax credit claims must be reconciled with supplier's returns and statutory forms like GSTR-2A and GSTR-3B. Discrepancies must be examined with due diligence and opportunity for explanation given. Court's interpretation and reasoning: The Court noted that the assessing authority's stand evolved during proceedings and in affidavit filed before the Court, admitting inability to reconcile the petitioner's data with GST portal data. The impugned order did not reflect such inability or any attempt to seek clarification. Key evidence and findings: The petitioner had reversed ITC where payments were not made within 180 days and reclaimed ITC upon payment, reflected in statutory returns. The assessing authority did not consider this explanation or the annexures submitted. Treatment of competing arguments: The respondent contended that the petitioner's data was not verifiable or relatable to statutory returns. The petitioner maintained that the statutory returns themselves were the documentary evidence and the authority should have verified them. Application of law to facts: The Court emphasized that the assessing authority was obligated to verify statutory returns and allow reconciliation rather than reject claims summarily. Conclusions: The Court found that the assessing authority failed to apply its mind properly to the reconciliation process and thus committed an error. Issue 4: Validity of Assessment and Penalty Order under Section 73 and Section 20 IGST Act Relevant legal framework and precedents: Section 73 of the CGST Act deals with determination of tax not paid or short paid, including penalty provisions. Section 20 of the IGST Act relates to determination of tax liability on inter-state supplies. Procedural fairness and adherence to natural justice are prerequisites for valid orders. Court's interpretation and reasoning: The Court found that the penalty and tax demand were based on the impugned order which ignored relevant evidence and denied an opportunity to explain discrepancies. Application of law to facts: Since the order was vitiated by procedural irregularity and non-application of mind, the assessment and penalty imposed could not be sustained. Conclusions: The Court set aside the impugned order and directed the assessing authority to rehear the matter after affording opportunity to the petitioner. 3. SIGNIFICANT HOLDINGS The Court held: "If, as a matter of fact, the 1st respondent had any doubt to undertake the reconciliation of the facts and figures as reflected in the documents presented before the appellant and with that of the one which is uploaded in the portal, then the 1st respondent ought to have afforded an opportunity to the appellant to explain the discrepancies. Having not chosen to do so, would vitiate Ext.P4 order." Core principles established include:
Final determinations on each issue were:
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