2024 (4) TMI 363 - HC - GST

Validity Of Order - Tax demand based on Audit observations - show cause notice replied to seeking further time up - turnover reconciliation and variation between the GSTR 3B return and Form 26AS - HELD THAT - In the impugned order the respondents recorded that the petitioner did not place on record documents pertaining to the turnover from Tamil Nadu. This conclusion cannot be completely disregarded in as much as the petitioner should have placed on record the trial-balance relating to Tamil Nadu and supported it with a certificate from a Chartered Accountant. However it appears prima facie that the tax demand was confirmed against the petitioner by taking into account the total turnover from the petitioner s profit and loss account. It also appears prima faci e that there could be duplication as between the head relating to turnover and the head relating to the differences between the GSTR 3B return and Form 26AS. Thus it is just and appropriate that the petitioner be provided another opportunity albeit by putting the petitioner on terms. Thus the impugned order is set aside on the following terms (i) As agreed to by the petitioner the respondents are permitted to appropriate 10% of the disputed tax demand relating to all heads of demand other than turnover reconciliation and difference between the GSTR 3B return and Form 26AS from the bank account of the petitioner which was attached. As regards the tax demand relating to turnover reconciliation and difference between GSTR 3B returns and Form 26AS the respondents are permitted to appropriate 5% of the tax demand from the aforesaid bank account. (ii) Upon realisation of the above amounts which shall be retained subject to the outcome of the remanded proceedings the attachment of the bank account shall stand raised. W.P. is disposed of on the above terms without any order as to costs.

Summary

Issues involved: Challenge to tax demand based on audit observations and report, failure to provide necessary documents, confirmation of tax demand, duplication in tax demand heads, opportunity to contest tax demand.

Issue 1: Challenge to tax demand based on audit observations and report

The petitioner, engaged in engineering and construction services, received audit observations for the assessment period 2017-2018. After receiving an intimation and a show cause notice, the impugned order confirming the tax demand was issued. The petitioner contended that the turnover reconciliation and differences between GSTR 3B return and Form 26AS were major components of the tax demand, requesting an opportunity to contest it effectively.

Issue 2: Failure to provide necessary documents

The Additional Government Pleader pointed out that the petitioner did not reply to the show cause notice or provide essential documents regarding turnover from Tamil Nadu. It was argued that the petitioner had multiple opportunities to contest the tax demand but failed to do so adequately, and that there exists a statutory remedy for such cases.

Issue 3: Confirmation of tax demand and duplication in tax demand heads

The petitioner challenged the tax demand related to turnover and differences between GSTR 3B return and Form 26AS, stating that turnover included all states' turnovers. The impugned order noted the absence of documents regarding turnover from Tamil Nadu and highlighted potential duplication between turnover and differences in returns. It was deemed appropriate to provide the petitioner with another opportunity to contest the tax demand, subject to certain terms.

Opportunity to contest tax demand

The petitioner agreed to remit percentages of the disputed tax demand under different heads. The impugned order was set aside, allowing the respondents to appropriate specified percentages from the petitioner's bank account. The petitioner was granted three weeks to file a reply with supporting documents, following which a fresh order was to be issued within two months. The case was disposed of with no order as to costs, and connected miscellaneous petitions were closed accordingly.