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2024 (2) TMI 714 - HC - GSTValidity of assessment orders - impugned assessment orders were issued without considering the petitioner's replies and that such orders disclose non-application of mind - violation of principles of natural justice - HELD THAT - The impugned assessment orders record the finding that the tax payer did not clarify whether the director is a whole time director, independent director or part time director. It is further recorded therein that the company did not clarify whether such director was paid salary. On examining the reply dated 15.06.2023 of the petitioner, it is found that the petitioner has stated categorically that remuneration was paid to Dinesh Victor, Managing Director of the company. In view of such reply, the conclusion that the petitioner did not clarify the category of directorship is unsustainable. Material documents such as the employment contract, if any, or the terms of employment, TDS deduction particulars and the like were, however, not submitted by the petitioner. Miscellaneous expenses - HELD THAT - The petitioner, in its reply of 15.06.2023, relied upon notifications under which registered persons are exempt from paying GST under reverse charge mechanism up to a specified limit or for a specified period. The petitioner also explained that some of the purchases under each head were from registered dealers. In these circumstances, the imposition of tax, penalty and interest on the basis of the total expenditure incurred towards advertisement and business promotion, repairs and maintenance, and computer and software maintenance, by drawing on figures provided in the respective financial statement is a conclusion reached without proper application of mind. Exempted turnover - HELD THAT - The petitioner relied upon Notification No.12/2017 and submitted that it provides training or coaching in relation to art and culture which are exempted supplies. In spite of the petitioner's replies to such effect, the Assessing Officer recorded the bizarre conclusion that the petitioner was engaged in the sale of painting and art works. These conclusions indicate non-application of mind to the material placed on record. Hence, the orders impugned herein warrant interference. These matters are remanded for reconsideration by the Assessing Officer - petition allowed by way of remand.
Issues involved: Challenge to assessment orders for assessment years 2018-19, 2019-20, and 2020-21 based on director's remuneration, miscellaneous expenses, and exempted turnover.
Director's Remuneration: The petitioner argued that the assessment orders were issued without considering their replies and demonstrated a lack of application of mind. The petitioner contended that the remuneration paid to the managing director was exempt from GST under relevant provisions. The court noted that while the petitioner confirmed payment of remuneration to the managing director, essential documents like employment contracts and TDS details were not submitted, leading to unsustainable conclusions. Miscellaneous Expenses: The petitioner raised concerns about the unreasoned findings in the assessment orders regarding various expenses incurred. They argued that the expenses were wrongly assumed to be related to supplies by unregistered persons without proper verification. The court found that the imposition of tax, penalty, and interest based solely on figures from financial statements, without considering exemptions for purchases from registered dealers, lacked proper application of mind. Exempted Turnover: Regarding exempted turnover, the petitioner cited relevant notifications exempting certain services related to art and culture from GST. Despite the petitioner's explanations, the Assessing Officer incorrectly concluded that the petitioner was engaged in the sale of paintings and art works, indicating a lack of consideration for the material presented. The court found these conclusions to be erroneous and reflective of non-application of mind. Judgment: The court allowed the writ petitions, quashing the impugned orders and remanding the matters for reconsideration by the Assessing Officer. The petitioner was directed to submit all relevant documents within two weeks for a fresh assessment. The Assessing Officer was instructed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue new assessment orders within two months of receiving the documents.
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