2024 (8) TMI 449 - HC - GST

Violation of principles of natural justice - writ petition challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits - HELD THAT - In these circumstances, it appears prima facie that the imposition of GST on the entire differential turnover does not appear tenable. However, these aspects are required to be verified by the assessing officer on closely examining all relevant documents. The other discrepancies based on the difference between the GSTR returns and the financial statements may also require reconsideration since the financial statements appear to be prima facie prepared on All India basis. Since the petitioner failed to participate in proceedings in spite of being provided several opportunities, it is just and necessary to put the petitioner on terms. The impugned order dated 16.04.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of three weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice, including the quantification made in the impugned order, within the aforesaid period. The writ petition is disposed off.

Summary

Issues: Challenge to tax demand on grounds of lack of reasonable opportunity to contest, discrepancy in tax proposals, disparity in turnover reported, compliance with principles of natural justice, and setting aside the impugned order.

Analysis:

1. The writ petition challenges an order dated 16.04.2024, alleging the petitioner was not given a fair chance to contest the tax demand. The petitioner claimed the business operated in multiple states but did not have substantial taxable supplies in Tamil Nadu during 2018-2019. The petitioner failed to respond to the show cause notice, leading to the issuance of the impugned order.

2. The petitioner's counsel argued that the tax demand in the show cause notice was limited to specific issues, but the impugned order confirmed multiple tax proposals for a significantly higher amount. The discrepancy in turnover reported in Tamil Nadu compared to the All India turnover was highlighted, with a request for a remand to address the errors in tax proposals based on incorrect data.

3. The respondents' counsel contended that the principles of natural justice were followed, with notices and reminders sent to the petitioner, who failed to respond. The show cause notice covered all heads of claim, but quantification was done only for certain discrepancies. The imposition of GST on the entire differential turnover was questioned, and it was suggested that a thorough examination by the assessing officer was necessary.

4. The court set aside the impugned order on the condition that the petitioner remits 10% of the disputed tax demand for specific discrepancies within three weeks. The petitioner was allowed to submit a reply to the show cause notice within the same period. Upon compliance, the assessing officer was directed to provide a reasonable opportunity for the petitioner to be heard before issuing a fresh order within three months.

5. The writ petition was disposed of without costs, with connected miscellaneous petitions closed. The judgment focused on ensuring the petitioner's right to contest the tax demand with proper opportunities and verification of discrepancies in the tax proposals and turnover reported.