2022 (7) TMI 1021 - HC - GST

Scope of the show cause notice (SCN) - Violation of of principles of natural justice - petitioner has been filing returns regularly after adjusting the tax credit in terms of Section 16 of CGST/SGST Act, 2017 - HELD THAT - The show cause notice was issued on 10.08.2021, by the Office of the Assistant Commissioner (ST)(FAC), Tadipatri, demanding the petitioner to pay a sum of Rs.69,12,114/- under CGST. On the very same day, another show cause notice was issued demanding payment of Rs.69,12,114/- under SGST Act - The petitioner submitted his explanation on 09.09.2021 explaining the mistake committed by the authority in arriving at the said figures. The representation was received on 09.09.2021. Thereafter, the impugned order came to be passed on 17.11.2021 fixing the liability at Rs.5,20,39,891/-. The said amount was arrived at after calculating interest and penalty to be paid by the petitioner, on the amount demanded. Not only that, an amount of Rs.84,16,365/- was added towards Integrated Goods and Services Tax (IGST) which is impermissible under law. It is also to be noted here that in case if the authority intend to add interest and penalty on the amount fixed in the show cause notice, separate notices ought to have been issued to the petitioner for the said demand, which was not done in the instant case. Apart from that a perusal of the order would show that except extracting the explanation given to the show cause notice, there is no discussion raised on the objections - It is also to be noted that, while dealing with the objections raised, the authority goes into the aspect of claim of ITC alleged to have been made by the petitioner which was not the content of the show cause notice. The matter is remanded back to the authority to issue fresh notice and there after proceed further in accordance with law - Appeal allowed by way of remand.

Summary

Issues involved:
Challenge to order in Form GST DRC-07 as illegal, improper, incorrect, and violative of principles of natural justice.

Analysis:
1. Facts and Background:
The petitioner, a company engaged in mechanical erection and fabrication of Cement and Steel plants, challenged an order dated 17.11.2021 in Form GST DRC-07 as illegal and incorrect. The order was issued by the 1st respondent after inspecting the petitioner's business premises and assessing tax liabilities for the years 2018-19 and 2019-20 under CGST and SGST Acts.

2. Contentions of the Petitioner:
The petitioner contended that the impugned order lacked reasons and failed to consider the explanation provided by the petitioner in response to the show cause notice. The petitioner argued that the order demanded an amount significantly higher than the initial notice, raising concerns about the calculation and imposition of additional taxes, penalty, and interest.

3. Respondent's Position:
The respondent, represented by learned counsel, argued that the petitioner did not respond to the show cause notice, justifying the issuance of the impugned order. While acknowledging the discrepancy in the demanded amount, the respondent claimed that it did not prejudice the petitioner.

4. Judicial Analysis:
The Court scrutinized the procedural compliance and found that the impugned order deviated from the established legal procedure. The order unilaterally added IGST interest, CGST, and SGST amounts without proper justification or separate notices for penalty and interest. The Court highlighted that the authority failed to adequately address the petitioner's objections and incorrectly focused on issues not raised in the original show cause notice.

5. Decision and Conclusion:
In light of the procedural irregularities and lack of proper consideration of the petitioner's objections, the Court set aside the challenged order dated 17.11.2021. The matter was remanded back to the authority for fresh proceedings in accordance with the law. The Court emphasized the importance of following due process and addressing objections raised by parties to ensure a fair and transparent assessment of tax liabilities.

6. Conclusion:
The judgment by the High Court of Andhra Pradesh highlighted the significance of procedural fairness and adherence to legal requirements in tax assessment matters. The decision serves as a reminder of the importance of considering all relevant factors, addressing objections, and ensuring compliance with statutory provisions to uphold the principles of natural justice in administrative actions.